Powell Likely to Stay as Miran Resigns from White House Post

Recent developments suggest that Jerome Powell may remain as the chair of the Federal Reserve beyond his current term, which ends in May. This potential extension comes alongside Stephen Miran’s resignation from his influential role within the administration.

Trump’s Influence on the Federal Reserve

President Trump’s attempts to influence the Federal Reserve’s policies have led to political turmoil. He has often criticized Powell, aiming to shape monetary policy with a focus on managing interest rates.

Initially, Trump sought to maintain high interest rates during Biden’s presidency to hinder his economic approval ratings. However, after taking office, he shifted his stance to advocate for lower rates, engaging in unconventional methods to sway the Fed, including legal threats.

Leadership Changes at the Fed

In a recent effort to replace Powell, Trump considered Kevin Warsh, a former Fed governor. Warsh’s hawkish stance could potentially influence the balance-sheet conversation, though he may face obstacles, notably Senate Banking Committee hearings. The committee has stalled any progress until criminal investigations against Powell and Fed Governor Lisa Cook are resolved.

• Current investigations involve both Powell and Cook, raising conflict concerns.
• The Supreme Court has dismissed Trump’s attempt to accelerate Cook’s removal.
• The ongoing scrutiny complicates Warsh’s nomination and may ultimately benefit Powell.

Stephen Miran’s Resignation

Stephen Miran, a key ally of Trump at the Fed, has resigned from his post while serving as the chairman of the Council of Economic Advisers. His departure signifies a distancing from the White House, emphasizing the Fed’s need for political independence.

A White House spokesman stated that Miran’s resignation reflects a commitment made last year. Miran had initially stepped in to fill a vacancy and had indicated that he would resign from the CEA if required to continue at the Fed.

The Implications of These Changes

The ongoing investigations and Miran’s resignation may influence Powell’s continuation as Fed chair. UBS chief economist Paul Donovan noted that Democratic opposition is likely to maintain Powell’s position beyond May, highlighting the importance of the Fed’s independence in monetary policy.

As political dynamics shift, the effectiveness of the Federal Reserve’s operations and its relationship with the White House remain crucial themes in the current economic landscape.