Trump nominates CEA chair Miran Fed governor to replace Kugler until Jan 31, buying time for Powell succession
President Donald Trump just bought some time to strategize about 2 key Fed roles by nominating his current Council of Economic Advisors chair Stephen Miran as a Fed governor. Here what’s going on and how it’ll play out.
Today is the last day for resigning Fed governor Adriana Kugler, and Trump nominated Miran to replace her until January 31, saying on Truth Social: “In the meantime, we will continue to search for a permanent replacement.”
The Miran nomination needs confirmation in the Senate which reconvenes September 2, and if it’s fast-tracked, Miran would be in position for the Fed’s next FOMC rate-setting meeting on September 17.
CME futures already show a 91.5% probability of a .25% rate cut on September 17.
Rate cuts are what Trump wants most, and since July’s dismal jobs report hit August 1 — showing just 35,000 new jobs in each of the past 3 months, the worst since the pandemic — the probability for a September rate cut spiked from 39% on July 31 to 83% (and is since up to 91.5%).
Plus mortgage rates have already dropped .375% — from 6.875% to 6.5%, per Mortgage News Daily — as mortgage bonds rallied on the bad jobs news. On a $400k loan, this saves borrowers $100 per month.
Miran ostensibly being a voting FOMC member by September 17 further supports Fed rate cut probability.
After September 17, there are 3 more FOMC meetings that Miran could be part of: October 29, December 10, and January 28.
This is a lot of time for the Fed to potentially cut and/or change its focus from fighting inflation (higher rate stance) to maximizing employment (lower rate stance).
Then the next huge milestone is Fed chair Jay Powell’s term as chair expiring in May 2026 (and his role as governor expires at the end of 2028).
So the Miran nomination buys Trump some time to evaluate a potential Fed sentiment shift before making a final decision about Powell’s succession.
Top contenders for the Fed chair job have been current Fed governor Christopher Waller, former Fed governor Kevin Warsh, and National Economic Council Director Kevin Hassett.
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Reference:
– Trump to nominate economic advisor Miran as new Fed governor, replacing Kugler (CNBC)
– What does Stephen Miran FOMC nomination mean for Fed independence? (WSJ)
– Meet Stephen Miran, Trump’s new Fed pick (Business Insider)
– Mortgage rates from Mortgage News Daily