JPMorgan sees Trump’s nomination of Stephen Miran to the Fed board as a problem

Donald Trump’s pick of Stephen Miran for Federal Reserve governor is attracting attention beyond his image as someone who favors low interest rates.

JPMorgan’s analysts think that Trump choosing Miran might be part of a bigger plan to change the Federal Reserve Act, the law that defines the Fed’s powers, as reported by Fortune. According to a report by Fortune, this could reduce the Fed’s ability to make decisions without political interference.

On Thursday, Trump named Miran, who currently chairs the White House Council of Economic Advisers, to fill the Fed board seat vacated by Adriana Kugler. Kugler stepped down before her term was set to end in January, and as Cryptopolitan predicted earlier, Trump would use this opportunity to reshape the Fed.

Miran is best known for crafting a proposal before joining the administration, nicknamed the “Mar-a-Lago Accord,” aimed at reducing the U.S. trade deficit. But it is his 2024 co-authored paper proposing sweeping reforms to the Fed that is now getting renewed attention.

In a research note Friday, JPMorgan’s chief economist Bruce Kasman and his team outlined the paper’s key recommendations. These include granting the U.S. president the authority to fire Federal Reserve board members and regional bank presidents at will, giving Congress control of the Fed’s budget, and transferring the Fed’s oversight of banks and markets to the Treasury Department.

“There is little doubt that the consequence of these reforms would be to materially increase the influence of the president over U.S. monetary and regulatory policy,” the analysts wrote.

Such measures would require congressional approval, and JPMorgan noted there is no clear sign lawmakers are ready to back such far-reaching changes.

Still, Miran will join the Fed’s board with a detailed 2024 reform agenda. His paper accused the central bank of “groupthink” and expanding beyond its original purpose, claiming that his proposed changes would actually safeguard its independence, a view JPMorgan disputes.

“The main threat to the Fed independence is not politically motivated turnover shifting the outcome of votes,” the analysts said.

“Rather, the appointment fuels an existential threat as the administration looks likely to take aim at the Federal Reserve Act to permanently alter U.S. monetary and regulatory authority.”

A Trump administration official said that statements made by appointees before entering the administration do not reflect official policy positions.

Concerns are growing over Congress’s power to reshape the Federal Reserve

Congress has the legal authority to change the Fed’s mission and powers. Last month, Wharton finance professor Jeremy Siegel told CNBC that Chair Jerome Powell might need to resign if he wants to protect the central bank’s long-term independence.

Siegel warned that if the economy falters, Trump could make Powell a “perfect scapegoat” and push Congress to grant the White House more control over the Fed. He noted that the Federal Reserve, created by the Federal Reserve Act of 1913, is not mentioned in the Constitution and has had its powers altered by Congress multiple times.

Senator Bernie Moreno, a Republican of Ohio, indicated last week that he is open to revising the Federal Reserve Act. His targets include the interest the Fed pays on bank reserves and its dual mandate. However, Moreno also said he supports the concept of central bank independence.

JPMorgan analysts said the Fed still enjoys enough backing in the Senate to make major legislative changes difficult, given the 60-vote threshold needed to bypass a filibuster.

Even so, the bank’s analysts believe the Fed will treat the threat to its independence seriously and may seek to defend it by making some concessions to the White House and Congress.

A tilt toward easier monetary policy could happen under persistent calls from the White House to lower interest rates. Rates have stayed steady as the Fed monitors inflation risks, particularly from Trump’s tariffs.

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