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In the previous year, a pair of academics proposed eliminating the “revolving door” between the presidential administration and the Federal Reserve. They claimed that this step would be essential to reducing motivations for officials to operate in immediate political gains.

Eight months afterward, both writers – Stephen Miran and Dan Katz – joined the presidential team in high-level roles. This week, Miran, now head of the US Council of Economic Advisers, took a position as a governor at the Fed.

At his Senate approval process, Miran vowed to preserve the central bank’s independence, but made clear he would remain from his administration job, instead taking unpaid leave.

Just moments before the latest central bank gathering, Miran was appointed to the leadership panel – while the president continued pushing for the removal of another board official.

Executive Pressure and Rate Cuts

Trump has consistently expressed his desire for the Fed to reduce interest rates more aggressively. Last month, he remarked, “I will soon have a majority very shortly” on the rate-setting committee.

In response to questions by journalists about the central bank’s independence, Trump answered, “It ought to be independent. However I think they should listen to knowledgeable individuals, such as myself.”

Such open pressure defies long-standing norms where presidents typically avoid interfering with monetary policy.

A Precarious Equilibrium

This week, the Fed finally lowered interest levels by 25 basis points, marking the initial reduction since last winter. Officials indicated that more cuts are likely.

Yet, only one member – Stephen Miran – dissented, pushing for a larger 50 basis point reduction.

Many additional officials expressed apprehension about price increases, which has stayed stubbornly high in recent months. These officials emphasized the need to weigh economic stimulation with price stability.

“Shifts in federal regulations are still unfolding, and their impacts on the economy are not yet clear,” remarked Fed Chair Jerome Powell.

Organizational Independence Under Threat

Despite Powell’s assurance that rate decisions are guided by economic indicators and free from political influence, outside demands continue.

Trump is said to be pushing for the removal of a Biden-appointed governor and plans to appoint a replacement leader when Powell’s term ends next year.

At present, though, the Fed chair maintains that deliberations within the central bank are centered around persuasive arguments backed by market statistics.

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

Yet, several observers question whether the central bank’s autonomy can survive such overt executive pressure.

While the president personally stated: “The Fed must take their independent choice. But they should listen.”