Senate committee approves Trump's Fed Board nominee, raising concerns about its independence

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WASHINGTON (AP) — A Senate committee on Wednesday approved the nomination of White House economic adviser Stephen Miran to the Federal Reserve's board of governors, setting up a likely approval by the full Senate, which would make Miran the third Trump appointee to the seven-member board.

The White House has pushed for an expedited Senate approval of Miran, who was nominated by President Donald Trump to replace former Fed governor Adriana Kugler. Kugler stepped down Aug. 1. Miran would, if approved, simply finish her term, which expires in January.

Miran may be approved by the full Senate in time for the Fed's meeting next week, when it is widely expected to reduce its key short-term interest rate. The committee voted to approve Miran on partisan lines, 13-11, with all Democrats voting against confirmation.

Miran's nomination has raised concerns about the Fed's independence from day-to-day politics, particularly since he said during a hearing last week that he would keep his job as head of the White House's Council of Economic Advisers while on the Fed's board, a historically unusual arrangement. Presidents have nominated members of their staffs to the Fed's board before, but the nominees have always given up their White House jobs.

Trump has hoped to gain a majority on the Fed's board as part of his efforts to push the central bank to rapidly cut its key interest rate. Yet late Tuesday his goal was dealt a setback when a federal court blocked Trump's effort to fire Fed governor Lisa Cook, who he has accused of mortgage fraud.

It is now likely that both Miran and Cook will be on the Fed's board when it meets next week. Members of the Fed's board of governors vote on all interest rate decisions as well as on financial regulatory policy. Trump appointed two other members of the board — Christopher Waller and Michelle Bowman — in his first term. Waller has been mentioned as a potential replacement for Chair Jerome Powell, a frequent Trump target whose term ends next May.

Democrats on the committee criticized Miran for planning to keep his White House ties while at the Fed.

“The Federal Reserve was designed to make decisions free from political interference, guided by data and the long-term stability of our economy, not the political agenda of any one president," Sen. Mark Warner, a Democrat from Virginia, said in a statement before the vote. “Donald Trump has made clear he wants to tear down that independence, just as he has with so many of the institutions that have kept our democracy and our economy strong.”

Miran said he would step down from his White House position if he is chosen for a longer term. Yet he can remain on the board after Kugler's term ends in January, if no replacement is named. He has said in that case he would consider keeping his White House job even if he remains on the board after January, sparking fresh criticism from Democrats.

The jockeying around the Fed is occurring as the economy is entering an uncertain and difficult period. Inflation remains stubbornly above the central bank's 2% target, though it hasn't risen as much as many economists feared when Trump first imposed sweeping tariffs on nearly all imports. The Fed typically would raise borrowing costs, or at least keep them elevated, to combat worsening inflation.

At the same time, hiring has weakened considerably and the unemployment rate rose last month to a still-low 4.3%. The central bank often takes the opposite approach when unemployment rises and cuts rates, to spur more borrowing, spending, and growth.

Powell signaled late last month that the Fed may focus more on risks to the job market in the coming months, which makes rate cuts more likely. Wall Street investors now expect three quarter-point reductions this year, which would reduce the Fed's short-term rate to about 3.6%, from its current level of 4.3%.

The Fed cut its key rate three times in 2024, but has kept it unchanged since then. Powell has said the central bank wanted to evaluate the impact of Trump’s tariffs on the economy before making any moves.