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In the previous year, a pair of academics proposed banning the “revolving door” between the White House and the central banking system. They argued that such a move would be “critical” to reducing motivations for officials to operate in short-term political interests.

Less than a year afterward, the two writers – Dan Katz and Stephen Miran – entered the Trump administration in high-level roles. This week, Miran, now chair of the US Council of Economic Advisers, took a position as a board member at the Federal Reserve.

At his confirmation hearing, Miran vowed to preserve the central bank’s autonomy, but made clear he would not resign from his White House role, only taking unpaid leave.

Merely hours prior to the latest Fed meeting, he was appointed to the leadership panel – even as former President Donald Trump continued urging for the dismissal of another voting member.

Presidential Influence and Rate Cuts

Trump has consistently stated his wish for the Fed to reduce interest rates more aggressively. Recently, he remarked, “I will soon have a controlling number very shortly” on the rate-setting panel.

When asked by reporters about the central bank’s independence, he answered, “It ought to be independent. But I think they should heed smart people, such as myself.”

Such public influence breaks with traditional practices where presidents usually refrain from interfering with interest rate decisions.

A Delicate Equilibrium

Recently, the Federal Reserve at last cut rates by a quarter point, marking the initial decrease after last winter. Policymakers signaled that further reductions may follow.

Yet, a single governor – Miran – dissented, advocating a larger half-point cut.

Many additional officials expressed apprehension about inflation, which has stayed stubbornly high in recent months. They stressed the importance to weigh growth support with controlling inflation.

“Changes to government policies are still unfolding, and their impacts on the economy are not yet clear,” stated central bank leader Jerome Powell.

Organizational Autonomy Under Pressure

Despite the chairman’s confidence that policy choices are based on economic indicators and free from politics, outside demands persist.

Trump is reportedly pushing for the removal of Lisa Cook and plans to name a new chair when Powell’s tenure ends in the coming months.

At present, however, Powell insists that deliberations within the Fed are centered around persuasive arguments backed by economic data.

“It is ingrained of the institution,” he stated. “That’s not going to change.”

Yet, several observers wonder whether the central bank’s autonomy can withstand such direct political pressure.

While the president personally stated: “The Fed must take their own choice. Yet they should pay attention.”