Trump’s Latest Fed Appointment Fuels Fears for Central Bank Independence

President Donald Trump’s recent appointment of Stephen Miran to the Federal Reserve Board is sparking significant concern among financial analysts, with JPMorgan warning it could pose an “existential threat” to the central bank’s independence.

Miran, previously the chair of the White House’s Council of Economic Advisers, was named to fill the vacancy left by Adriana Kugler. His appointment comes under intense scrutiny due to a controversial 2024 paper he co-authored, which advocates for a radical overhaul of the Federal Reserve.

JPMorgan analysts, led by chief economist Bruce Kasman, highlighted key proposals from Miran’s paper, including granting the U.S. president at-will power to dismiss Fed board and bank presidents, transferring the Fed’s regulatory authority over banks to the Treasury, and giving Congress control over the Fed’s operating budget. Such reforms, they argue, would drastically increase presidential influence over U.S. monetary and regulatory policy.

While these sweeping changes would require congressional approval—and support for them is not guaranteed, given the need for 60 Senate votes to overcome a filibuster—Miran’s presence on the board signals a clear reform agenda. His 2024 paper accused the Fed of “groupthink” and mission creep, ironically claiming that his proposed changes would preserve, not undermine, its independence.

Despite an administration official stating that Miran’s past views do not necessarily reflect current policy, experts like Wharton finance professor Jeremy Siegel and Senator Bernie Moreno (R-Ohio) have also recently discussed the potential for Congress to amend the Federal Reserve Act. However, many analysts believe a complete erosion of Fed independence is unlikely, citing strong bipartisan resistance to such fundamental shifts and the broader implications of altering Senate filibuster rules.

Nevertheless, the Fed is expected to take the threat seriously, potentially leading to some accommodation towards White House and congressional demands. JPMorgan anticipates that this pressure could bias Fed policy dovishly and regulatory decisions towards lightening burdens, even as the White House continues to push for rate cuts amid inflationary concerns.

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