Political infighting intensified before the Federal Reserve's September meeting: Trump's "crony" successfully entered, but the attempt to dismiss board member Cook failed.

The Trump administration's efforts to influence the decision-making of the Federal Reserve have sparked a fierce game between them in the independence of the central bank. The U.S. Senate approved Trump's economic adviser, Stephen Miran, joining the Federal Reserve Board with a narrow majority, strengthening Trump's influence on monetary policy. Miran supports rate cuts and is expected to advocate for a more significant easing at the September meeting. At the same time, the D.C. Circuit Court of Appeals rejected Trump's request to dismiss Federal Reserve Board member Lisa Cook, upholding the independence of the Federal Reserve. The court ruled that the president does not have the authority to dismiss a board member based on their policy positions. Trump's economic adviser approved to join the Federal Reserve On Monday, the U.S. Senate approved Stephen Miran's entry into the Federal Reserve Board by a slim margin of 48-47, expanding Trump's influence on the Federal Reserve and giving Miran one of the 12 voting rights on interest rate decisions at key policy meetings. The Senate's approval marked the final step of this process, which began in August when Adriana Kugler unexpectedly resigned from the Federal Reserve Board. This provided Trump with an opportunity to appoint someone more inclined to lower interest rates, as he has been requesting since the beginning of the year. Normally, the nomination of Federal Reserve Board members requires several months of deliberation in the Senate before approval; Miran's case was completed in less than six weeks. Lisa Murkowski of Alaska was the only Republican senator to oppose Miran's nomination. Miran is expected to participate in the two-day Federal Reserve meeting that will begin on September 16. The market generally expects the meeting to announce a 25 basis point rate cut, but analysts believe Miran may advocate for a larger rate cut. As chairman of the White House Council of Economic Advisers, he has repeatedly emphasized that Trump's high tariff policy will not push inflation up and believes that immigration restrictions will reduce housing demand, easing pressure on prices. As the newest member of the Federal Reserve, Miran's responsibilities will not only be limited to voting on rate decisions; board members usually participate in various committee work, including U.S. financial regulation and supervision, community banking operations, personnel and budget decisions of the Federal Reserve System, and decisions of its 12 district banks. Miran will continue to serve in the White House, but will be on unpaid leave during his term at the Federal Reserve (ending on January 31), although he can continue indefinitely if a successor for his Federal Reserve position has not been selected and confirmed. Democrats have called this arrangement a way for him to become Trump's "puppet," but Miran denies this. The other two Federal Reserve Board members appointed by Trump in his first termMichelle Bowman and Christopher Wallerwere in disagreement at the July 29-30 meeting, advocating for a more accommodating policy. Analysts believe that since then, labor market data have been below expectations, which may prompt them to hold different opinions again in September, leaning towards asking for a further significant rate cut (greater than the widely expected 25 basis points). Since 1988 (during the early term of former Fed Chairman Alan Greenspan's tenure), there has not been a situation where three Federal Reserve Board members have held different opinions simultaneously. Trump's dismissal of Federal Reserve Board member rejected Meanwhile, on Monday, a U.S. appeals court rejected a request to dismiss Federal Reserve Board member Lisa Cooka move that marked the first time a president had taken such action since the establishment of the Federal Reserve in 1913and this latest step in the legal battle threatens the long-standing independence of the Federal Reserve. The decision of the U.S. Court of Appeals for the District of Columbia Circuit means that the Trump administration would only have a few hours to appeal to the U.S. Supreme Court if they wanted to prevent Cook from attending the Federal Reserve policy meetings scheduled for Tuesday and Wednesday. The appeals court rejected the Justice Departments request to temporarily pause a judges order aiming to prevent Trump from firing Cook. Cook was appointed by former President Joe Biden of the Democratic Party. U.S. District Judge Jia Cobb ruled on September 9 that Trump claimed Cook committed mortgage fraud before taking office (which Cook denies), but according to the law that established the Federal Reserve, these charges may not be sufficient reasons to dismiss her from office. When establishing the Federal Reserve, the U.S. Congress included provisions to protect the central bank from political interference. According to the law that established the Federal Reserve, board members can only be dismissed by the president for "good cause," but the law does not define this term or establish a dismissal procedure. So far, no president has dismissed a Federal Reserve Board member, and the law has never been tested in court. In the Monday ruling, Garcia wrote that since Cook's due process claim "is likely legitimate," the court did not need to delve into the meaning of the term "good cause." Cook is the first African American woman to serve as a Federal Reserve board member, and she sued Trump in late August. Cook has stated that the charges do not give Trump the legal authority to dismiss her, but were used as an excuse to fire her based on her monetary policy stance. The Trump administration argues that the president has the authority to decide when a Federal Reserve member should be dismissed independently, and that courts do not have the right to review such decisions. This event has an impact on the ability of the Federal Reserve to set interest rates without considering political wishes, which is crucial for any central bank to effectively carry out tasks such as controlling inflation. This year, the Supreme Court allowed Trump to dismiss various officials in federal agencies previously established under congressional regulations and independent of direct presidential control. However, in a May order handling a case involving Trump's dismissal of two Democratic members of the Federal Labor Relations Authority, the Supreme Court stated that it considered the Federal Reserve different from other regulatory agencies. The report states that the Federal Reserve is a "structurally unique, semi-private entity" with a distinct historical tradition. In the Monday ruling, the judge wrote that unlike the other regulatory commission members that the Supreme Court allowed Trump to dismiss, Cook was not allowed to be dismissed at any time, making her case unique. During the process of halting Cook's dismissal, the judge found that the "best reading" of the 1913 law is that it only allows for the dismissal of Federal Reserve officials during their tenure for misconduct. The mortgage fraud charges against Cook are related to actions she took before her appointment to the U.S. Senate in 2022. Cook's lawyers stated in response documents that dismissing Cook before the meeting would affect U.S. and foreign markets, and allowing Cook to continue serving would be in the public interest, exceeding Trump's efforts to control the Federal Reserve.