Miran Resigns, Fed-Political Tensions Sharpen
Federal Reserve Governor Stephen Miran officially resigned from his position as Chairman of the White House Council of Economic Advisers (CEA) on Tuesday. This step was taken to fulfill a promise he made to the Senate: if his term at the Fed turned out to be longer than originally planned, he would completely resign from the CEA.
Previously, Miran had been on a two-legged position: he had been on unpaid leave from the CEA since being appointed by Trump to fill a vacant seat on the Fed's Board of Governors. This arrangement drew strong criticism from Democratic Senators, who argued that the situation had the potential to compromise the central bank's independence—some even accused it of making Miran appear like an "extension" of the president.
In his resignation letter, quoted by Reuters, Miran stated that he initially received legal advice that he was not obligated to resign because his Fed assignment was only for a few months. However, because he remained on the Board after January, he chose to honor his commitment to the Senate and officially resign from the CEA.
This momentum comes amid major changes at the top of the Fed. Trump has announced plans to nominate Kevin Warsh as the next Fed chairman to replace Jerome Powell (Powell's term ends in mid-May). Warsh is also projected to fill the board seat currently held by Miran—but the law allows Miran to remain in office until a replacement is confirmed by the Senate.
Within the Fed, Miran has been known to consistently push for aggressive interest rate cuts since joining in September, in line with Trump's desire for rapid rate cuts. This has made the market even more sensitive because the issue of "Fed policy direction" is now not just about economic data—but also about the political dynamics in Washington.
On the other hand, Warsh's confirmation process also has the potential to be difficult due to the DOJ investigation into Powell (which Powell has called part of an effort to undermine the Fed's independence) and a separate case involving Fed Governor Lisa Cook. A majority of the Senate Banking Committee—all Democrats plus at least one Republican—has even reportedly refused to proceed with the Warsh process while the Powell investigation is ongoing.
Source: Newsmaker.id
