Top economists from President Trump’s White House are set to attend an important Federal Reserve Committee meeting next week, focusing on interest rates.
Senate Majority Leader John Tune (Rs.D.) organized a vote on Thursday to push forward the appointment of Stephen Milan, Chair of the Council of Economic Advisers (CEA), to the Federal Reserve Committee.
Once the senator votes as anticipated, the full Senate might confirm him promptly on Monday, which would wrap up discussions regarding Milan’s nomination.
Trump and other Republicans aim to fill the vacancies within the Federal Reserve Committee before the Federal Open Market Committee (FOMC) convenes. This group is responsible for setting interest rates.
The president has been urging the Fed to lower interest rates more significantly than many economists think advisable and is hoping to replace Fed Chairman Jerome Powell when his term expires next year.
As a Federal Reserve Committee member, Milan will be one of the 12 voting members of the FOMC, thus playing a crucial role in shaping interest rate policies.
Milan is set to fill a position that will begin in January, although Trump has been keen on a 14-year term for him at the Fed to solidify his influence.
The Senate Banking Committee endorsed Milan’s nomination to the larger chamber on Wednesday, resulting in a narrow 13-11 vote. While Republicans touted Milan’s academic background and experience, Democrats accused him of being an instrument in Trump’s strategy to undermine the Fed’s independence.
Despite the push from Trump for rate cuts, Milan has maintained that he will uphold the separation between the Fed’s monetary policy and political influence throughout his confirmation process.
Nevertheless, Senate Democrats pointed to Milan’s inability to acknowledge Trump’s 2020 electoral defeat or his commitment to resign from the CEA as indications of improper loyalty to the president.
Milan stated he would take an unpaid leave from the White House while fulfilling the remaining four months of his term at the Fed but would resign from his White House position upon confirmation.
“This appointment poses a clear loyalty test for Dr. Milan. He understands that each vote will influence his chance of returning to his White House role,” remarked Sen. Elizabeth Warren (D-Mass.), a leading Democrat on the Senate Banking Committee, prior to the committee vote on Wednesday.
Trump is eager to see Milan installed at the Fed soon, although it’s unlikely his influence will be felt immediately during his first FOMC meeting. The Fed is expected to lower interest rates, but by a much smaller margin than what Trump desires, following several months of employment data trends.
