Trump's own people join the Federal Reserve! A surprise rate cut before the meeting raises alarms about the Fed's independence
2025-09-16 09:43:16
US President Trump secured a swift political victory on Monday evening (September 15th): the Senate confirmed his senior economic advisor, Stephen Miran, to the Federal Reserve Board by a narrow 48-47 vote, largely along party lines. This happened just hours before the Fed's interest rate meeting, which began on September 17th (September 18th Beijing time), was widely expected to discuss a rate cut.
Milan was nominated by the White House just two weeks ago, and his confirmation marks the second-fastest confirmation of a Fed governor in more than 25 years . He will replace Adrienne Kugler, who unexpectedly resigned last month.
It is worth noting that Milan is currently serving as chairman of Trump's Council of Economic Advisers. He has made it clear that he will not resign from this White House position, which also makes him the first Federal Reserve board member to serve in the executive branch since the Federal Reserve's governance reform in 1935 .
Milan plans to take an unpaid leave of absence from his current role as a Fed governor until his term ends in January. He has publicly stated that he will return to the White House next year if he is not nominated for another Fed seat. At his confirmation hearing this month, Milan pledged to lawmakers that he would "independently carry out the duties of the Federal Reserve."
Although his participation in this meeting is not expected to change the outcome of the interest rate decision, the economic forecasts he submits may affect market expectations of the policy path. Some analysts believe that he may take a more radical stance on the extent of the rate cut and raise objections.
Meanwhile, the Trump administration is trying to remove current Federal Reserve Governor Lisa Cook, who won a major legal victory Monday evening when a federal appeals court rejected the administration's request to have her urgently removed before she attends this week's meeting.
Milan's "dual position" arrangement has sparked strong concerns among former officials from both parties and senior Federal Reserve officials, who believe the move could undermine public trust in the Fed's independence from the executive branch.
Eric Rosengren, former president of the Federal Reserve Bank of Boston (2007–2021), said bluntly: “Not resigning from government is a very bad signal… It is puzzling unless it is a deliberate provocation to show that you don’t care about being seen as not independent.”
Greg Mankiw, a Harvard economist and former chairman of the Council of Economic Advisers in the Bush administration, went a step further, saying, "This is like the Attorney General taking a temporary leave to serve as a Supreme Court judge." He believes this is in line with Trump's overall strategy of "putting monetary policy more under the control of the White House."
The only Republican who voted against the bill, Alaska Senator Lisa Murkowski, stressed that although she had a pleasant conversation with Milan, his refusal to resign from the White House "raises concerns about the independence of the Federal Reserve and is entirely a matter of perception."
Milan, who holds a PhD in economics from Harvard and has experience in asset management and the U.S. Treasury, has long been a sharp critic of Federal Reserve Chairman Powell's policies, including his decision to cut interest rates last year and his cautious approach to lowering rates after tariffs sparked inflation concerns.
Milan has publicly stated many times that Trump's "policy intuition is more prescient than Powell's," which is highly consistent with Trump's call for a substantial interest rate cut .
It is worth noting that he had previously criticized the transfer of positions between the Federal Reserve and the White House, believing that "it is impossible for people to go from being highly politicized to being politically neutral simply because of a promotion."
The second fastest confirmation in history to fill the vacant board member position
Milan was nominated by the White House just two weeks ago, and his confirmation marks the second-fastest confirmation of a Fed governor in more than 25 years . He will replace Adrienne Kugler, who unexpectedly resigned last month.
It is worth noting that Milan is currently serving as chairman of Trump's Council of Economic Advisers. He has made it clear that he will not resign from this White House position, which also makes him the first Federal Reserve board member to serve in the executive branch since the Federal Reserve's governance reform in 1935 .
Milan plans to take an unpaid leave of absence from his current role as a Fed governor until his term ends in January. He has publicly stated that he will return to the White House next year if he is not nominated for another Fed seat. At his confirmation hearing this month, Milan pledged to lawmakers that he would "independently carry out the duties of the Federal Reserve."
Although his participation in this meeting is not expected to change the outcome of the interest rate decision, the economic forecasts he submits may affect market expectations of the policy path. Some analysts believe that he may take a more radical stance on the extent of the rate cut and raise objections.
Legal wrestling and independence disputes
Meanwhile, the Trump administration is trying to remove current Federal Reserve Governor Lisa Cook, who won a major legal victory Monday evening when a federal appeals court rejected the administration's request to have her urgently removed before she attends this week's meeting.
Milan's "dual position" arrangement has sparked strong concerns among former officials from both parties and senior Federal Reserve officials, who believe the move could undermine public trust in the Fed's independence from the executive branch.
Eric Rosengren, former president of the Federal Reserve Bank of Boston (2007–2021), said bluntly: “Not resigning from government is a very bad signal… It is puzzling unless it is a deliberate provocation to show that you don’t care about being seen as not independent.”
Greg Mankiw, a Harvard economist and former chairman of the Council of Economic Advisers in the Bush administration, went a step further, saying, "This is like the Attorney General taking a temporary leave to serve as a Supreme Court judge." He believes this is in line with Trump's overall strategy of "putting monetary policy more under the control of the White House."
The only Republican who voted against the bill, Alaska Senator Lisa Murkowski, stressed that although she had a pleasant conversation with Milan, his refusal to resign from the White House "raises concerns about the independence of the Federal Reserve and is entirely a matter of perception."
Milan's Background and Policy Stance
Milan, who holds a PhD in economics from Harvard and has experience in asset management and the U.S. Treasury, has long been a sharp critic of Federal Reserve Chairman Powell's policies, including his decision to cut interest rates last year and his cautious approach to lowering rates after tariffs sparked inflation concerns.
Milan has publicly stated many times that Trump's "policy intuition is more prescient than Powell's," which is highly consistent with Trump's call for a substantial interest rate cut .
It is worth noting that he had previously criticized the transfer of positions between the Federal Reserve and the White House, believing that "it is impossible for people to go from being highly politicized to being politically neutral simply because of a promotion."
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