Stephen Miran, Trump’s Temporary Pick at the Fed, Could Have a Lasting Effect

Stephen I. Miran may be filling only a temporary opening on the Federal Reserve’s powerful board of governors, but in that role he can influence important discussions in and around the central bank, which President Trump has repeatedly attacked as an obstacle to his economic agenda.

Officials at the Fed are deliberating when and by how much to lower interest rates after a long pause, and there is a tight contest underway for who will be named the next chair of the institution.

Mr. Miran, the chair of Mr. Trump’s Council of Economic Advisers, was tapped on Thursday to serve as a governor for a term that expires on Jan. 31. That position was formerly held by Adriana Kugler, who officially stepped down on Friday after abruptly announcing last week that she would leave the post early and return to academia.

Her departure gave Mr. Trump a way to directly alter the upper echelons of the Fed, which has emerged as one of the president’s biggest foes since his return to the White House. Mr. Trump wants the Fed to cut interest rates significantly, but the central bank has opted to keep them steady this year, anticipating that the Trump administration’s tariff and other economic policies would unleash higher inflation even as growth slows.

That has made the Fed’s chair, Jerome H. Powell, a frequent target of attacks by Mr. Trump, who has long sought to shake up the central bank since naming Mr. Powell as chair in his first term.

An Insider to ‘Trumpet the President’s Message’

Once confirmed by the Senate — a process that could take months — Mr. Miran would hold one of the most powerful positions at an institution he has staunchly criticized in the past.

Before joining the Trump administration this year, Mr. Miran hit out at the Fed for what he described as “groupthink” on monetary policy, mission creep and regulatory blunders. He has called for tighter political reins on the institution, whose independence is seen as crucial to ensure that interest rate decisions are based on what is most appropriate economically rather than what is politically advantageous.

As a governor, Mr. Miran will be able to vote on decisions related to interest rates, bank regulation and other internal matters, giving him a perch from which he can push for certain policy changes.

“He will keep the seat warm and will trumpet the president’s message as a loyalist inside the building,” said Mark Spindel, chief investment officer at Potomac River Capital, who wrote a book looking at central bank independence.

Mr. Miran, who could be in place in time for the Fed’s policy meeting at the end of October, would join the central bank at a fractured time in which officials have split over the path forward for monetary policy. The Fed’s most recent gathering was one of the most contentious in decades, with two members of the board dissenting on the decision to hold interest rates steady. Christopher J. Waller and Michelle W. Bowman, both of whom Mr. Trump appointed in his first term, voted instead to cut interest rates by a quarter of a percentage point.

After the recent labor report showed weak jobs data in July, there is a case for the Fed to lower interest rates at its next meeting, in September. But so far none of the policymakers at the central bank have called for cuts of the magnitude that Mr. Trump has demanded.

The Fed’s policy decisions are made by the 12-person Federal Open Market Committee, which is comprised all seven governors and a rotating set of presidents from five of the regional reserve banks. Without a persuasive economic argument, Mr. Miran’s ability to influence the trajectory of interest rates will be limited.

But he will have other tools at his disposal. Ian Katz, a managing director at Capital Alpha Partners, said he expected Mr. Miran to be a fixture on TV rather than a “shrinking violet,” meaning he is likely to serve as a vocal source of internal opposition against whatever the Fed is doing.

Ellen Meade, who served as a senior adviser to the Fed’s board of governors until 2021 and is now at Duke University, said Mr. Miran would also get a rare inside look at how the Fed’s staff operated.

“One aspect of getting lower rates is the staff forecast — change the staff, change the process, change the forecast,” she said. “You might not be able to get the votes you want, but a different forecast might help you get there.”

Fiercer Competition for the Top Job

Mr. Trump made clear on Thursday that he would continue to search for a “permanent replacement” for the seat soon to be held by Mr. Miran. But if Mr. Miran performs to the president’s liking, he would be positioned to keep that role well beyond the end of January. A full term for a Fed governor is 14 years. He could even be considered a contender to replace Mr. Powell as chair when his term ends in May.

Two front-runners in that race have long been Kevin Hassett, director of the White House National Economic Council, and Kevin Warsh, a former Fed governor. Mr. Waller at the Fed is also in the running. Scott Bessent, the Treasury secretary, had been under consideration, but Mr. Trump ruled out his candidacy this week.

Mr. Miran’s stint at the Fed could make that competition even fiercer, said Ed Mills, a Washington policy analyst at Raymond James.

“It’s one thing to make comments on the sideline; it’s another thing to show how you would perform in that individual job,” he said. “Trump wants someone who can he can trust, and loyalty is among the most important qualifications.”

Derek Tang, an economist at the research group LHMeyer, predicts that this dynamic could compel other candidates for Fed chair to intensify their calls for lower interest rates in a bid to curry favor with the president.

“It keeps the heat on the other hopefuls,” he said, while still offering Mr. Trump an off-ramp in case Mr. Miran serves only through January.

The big wild card is whether Mr. Powell will depart the Fed altogether in May, when his term as chair is up, or stay on until 2028, when his term as a governor expires. If Mr. Powell sticks around, Mr. Trump will have only Mr. Miran’s seat to fill for the next Fed chair if no other policymaker steps down, unless he nominates Mr. Waller to the position.

“Both Miran and the White House are in a really good strategic position,” Mr. Tang said, noting that the White House now has more time to consider who will succeed Mr. Powell. “It gives them a lot of flexibility.”

But for Mr. Miran, the next couple of months will not be without challenges. He will have to walk what Mr. Katz at Capital Alpha Partners describes as a “tightrope” between defending policy stances that align with what Mr. Trump wants without alienating himself from his soon-to-be colleagues.

“He’s not going to want to say stuff to only please the president that just has everybody else at the Fed rolling their eyes,” Mr. Katz said. “He’s got to find something in between.”