Washington
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President Donald Trump’s nominee to the Federal Reserve’s powerful board may soon work alongside the same central banker the president tried to fire weeks ago, in what would be a stunning milestone in Trump’s ongoing bid to bend the historically independent Fed to his will.
In a Tuesday night ruling, a federal judge blocked Trump’s unprecedented firing of Fed Governor Lisa Cook. On Wednesday, Stephen Miran’s nomination to become a Fed governor got the green light in a procedural Senate committee vote Wednesday. Soon, all 50 senators will vote on whether to confirm him — a hurdle Miran is expected to clear in time to join the Fed for its rate-setting meeting next week.
Trump’s mark on the Fed — and also the US economy — is expected to become even clearer in the months, or even weeks, ahead. Since the beginning of his second term, Trump has taken a sledgehammer to the status quo of American economic policy by enacting historic tariffs and carrying out an intense pressure campaign against the Fed.
As a result, consumers have grown skittish about the economy’s future, wary of higher inflation and rising unemployment. For US businesses, the nagging uncertainty has translated into sluggish job growth over the summer, calling into question the true health of the world’s largest economy.
But many of Trump’s significant policy changes have been challenged in court, including his tariffs; and so far, it’s been a mixed bag of wins and losses for the president. The Republican-controlled Congress has delivered mostly wins for Trump, including the passage of his signature tax and spending bill.
At the moment, Cook retains her ability to vote on the Fed’s policy decisions, with a meeting coming up on September 16-17.
Judge Jia Cobb, an appointee of former President Joe Biden, granted Cook’s request to stop Trump’s attempted firing of the Fed governor through a preliminary injunction, writing that the president “has not identified anything related to Cook’s conduct or job performance as a Board member that would indicate that she is harming the Board or the public interest by executing her duties unfaithfully or ineffectively.”
The Trump administration is expected to appeal the judge’s decision, which keeps Cook in her role as the litigation proceeds. Trump last month said he fired Cook, citing unproven allegations of mortgage fraud, which are now being investigated by the Justice Department.
Meanwhile, the Senate Banking Committee on Wednesday voted to move forward Miran’s nomination to fill a seat vacated by former Fed governor Adriana Kugler, who resigned last month without providing a reason. Miran’s nomination has sparked opposition from Democrats, but not Republicans, who control the Senate. That means Miran has a solid chance at being confirmed, despite Democratic opposition.
“By trying to stack the Fed with political loyalists, Trump is laying the groundwork for even more instability for consumers,” Sen. Mark Warner of Virginia said in a statement Wednesday. “I strongly oppose the nomination of Stephen Miran, and I urge my colleagues to reject this latest effort to politicize the Federal Reserve.”
In written responses to the banking committee, released Tuesday, Miran said that, if confirmed, he won’t commit to resigning when the governor term ends in January if a permanent successor hasn’t been named. When Trump nominated Miran last month, he said it would be a temporary appointment to finish out Kugler’s unexpired term. Miran, currently the chair of the Council of Economic Advisers, reiterated that plan last week during his confirmation hearing.
On Tuesday, he also reiterated that he would take a leave of absence from his current role as one of Trump’s top economic advisers if his Fed term is only temporary. Sen. Elizabeth Warren of Massachusetts on Wednesday called that “a bad joke.”
“He will be sitting down the street from the White House, and he has refused to disclose any communications he has with the President or the White House while he’s at the Fed,” she said during the banking committee’s executive session.
The courts are also determining the fate of the centerpiece of Trump’s economic agenda.
On Tuesday, the Supreme Court agreed to hear arguments over the legality of Trump’s sweeping global tariffs. A lower court on August 29 ruled that the bulk of those levies enabled by presidential emergency powers were unlawful. Now Trump is requesting the nation’s highest court, which has a conservative majority, to overturn that ruling.
A decision would normally be expected by the end of June. But in this case, the court said it would expedite its review.
So far, Trump’s tariffs — many of which are in limbo — haven’t translated into surging inflation, economic data shows. US inflation cooled off at the wholesale level in August, according to the latest Producer Price Index released Wednesday.
But the levies have squeezed businesses, especially those in tariff-sensitive industries.
The construction and manufacturing industries have shed jobs throughout the year, according to Labor Department data, down 10,000 and 31,000 jobs compared to three months ago, respectively. Business surveys by the Institute for Supply Management show that manufacturers and service providers remain frustrated with Trump’s seesawing trade war, continuing to have a difficult time planning ahead.
“Tariffs continue to wreak havoc on planning/scheduling activities,” an electronics manufacturer told ISM for its August survey. “New product development costs continue to increase as unexpected tariff increases are announced — for example, 50% duties on imports from India, and increases to all countries up from original 10%”
