Fed Rate Meeting Begins: Trump Appointee Stephen Miran To Vote Alongside Embattled Gov. Lisa Cook

The Federal Reserve's highly anticipated two-day meeting to set interest rate policy began Tuesday, following eleventh-hour maneuvering to determine exactly who would participate in the key vote.

Stephen Miran, a White House economic adviser and President Donald Trump’s pick to fill a vacant seat on the Fed's Board of Governors, was sworn in with immediate voting power Tuesday morning following a narrow 48-47 confirmation vote in the Senate.

Miran is now the first White House official on the Fed's governing board, shattering precedent and potentially giving Trump a direct line to monetary policy deliberations within the rate-setting Federal Open Market Committee (FOMC).

Meanwhile, on Monday night a federal appeals court denied the Trump administration's attempt to remove Fed Gov. Lisa Cook, a Biden appointee who has been accused of mortgage fraud, ensuring her participation in the rate-setting meeting.

The last minute moves mean the FOMC will have a full complement of 12 members when it votes on rate policy Wednesday, including Fed Chair Jerome Powell, the six other members of the Board of Governors of the Federal Reserve System, and five presidents of regional Fed banks.

Most economists and investors expect the Fed to cut its benchmark rate by a quarter percentage point in response to weakening in the labor market.

Citing fears of inflation, the Fed has held rates steady in a range of 4.25% to 4.5% since December, despite Trump's insistence that rates needed to move lower.

Trump on Monday reiterated his call, writing in a post on his Truth Social that Powell "MUST CUT INTEREST RATES, NOW, AND BIGGER THAN HE HAD IN MIND."

The president added: "HOUSING WILL SOAR!!!"

Miran appointment raises new questions about Fed independence

Miran, an economist and investment strategist, was nominated by Trump to fill the Board of Governors seat vacated by Adriana Kugler, a Biden appointee who resigned suddenly and without explanation in August.

Miran will serve for the remaining four months of Kugler's term, which expires on Jan. 31, 2026, although following that he could be reappointed for a full six-year term.

In the meantime, Miran has taken an unpaid leave of absence from his role as chair of the White House Council of Economic Advisers. But he technically remains an employee of the president, making him the first White House official to sit on the Board of Governors in the Fed's 111-year history.

By law and tradition, the Fed has long been structured to remain free from political influence, and Powell in recent months has reiterated that any interest rates decisions would be based purely on economic data, in line with the Fed's dual mandate of stable prices and maximum employment.

Central bank independence is important because, historically, maintaining artificially low interest rates for political reasons often leads to runaway inflation and capital flight, ultimately driving government borrowing costs higher in the long run as investors lose confidence.

"Lessons learned from both the U.S. experience and the experience of central banks around the globe suggest that monetary policy decisions are better and more credible when they are insulted from politics," says Realtor.com® Chief Economist Danielle Hale.

In comments to reporters on Monday, Trump said he supports an independent Fed, while reiterating his view that the Fed rate should be "much lower."

"It should be [independent], it should be. But I think they should listen to smart people like me. I think I have a better instinct than him," Trump said, referring to Powell.

Following alarming reports about weakness in the labor market, Trump said that his long-standing call for lower rates was justified all along.

"If you look, all the economists got it wrong, I got it right along with some other people out of a hundred. So they should listen to people that are smart, there’s nothing wrong with that, but they have to make their own choice. But they should listen,” Trump said.

In his Senate confirmation hearing, Miran faced tough questions from Democrats about his ability to distance himself from Trump's influence. He responded that he would "act independently" if confirmed.

"However, the fact that he is taking an unpaid leave of absence from his administration role, rather than resigning the position, does raise questions about whether this setup will enable him to truly make independent decisions," says Hale.

Cook maintains Fed seat, for now

Separately, Cook's legal battle to hang on to her voting role at the Fed has sped through the federal courts, setting up a looming Supreme Court battle.

On Monday, the U.S. Court of Appeals for the District of Columbia Circuit upheld a lower court's order temporarily blocking Trump from firing Cook from the Fed.

Even as Cook joined the FOMC's two-day meeting on Tuesday, the Trump administration said it plans to further appeal the ruling to the Supreme Court.

"The president lawfully removed Lisa Cook for cause," a White House spokesman said in a statement. "The administration will appeal this decision and looks forward to ultimate victory on the issue."

Last week, DC District Judge Jia M. Cobb granted Cook's request for a preliminary injunction blocking Trump from removing her from the Fed.

Cobb in a memorandum wrote that she finds Cook "substantially likely" to succeed in her argument that Trump violated the Federal Reserve Act, because her purported removal did not comply with the law's requirement that Fed governors can only be removed "for cause."

The president announced Cook's removal in August, after Trump-appointed housing regulator Bill Pulte took to social media to accuse Cook of lying on a mortgage application by listing two separate properties, purchased weeks apart, as her primary residence. 

Cook, who has not been criminally charged, in her lawsuit argued that allegations made on social media were not sufficient cause to remove her from the Board of Governors. 

Fed rate decision imminent

The FOMC will announce its new interest rate policy at 2 p.m. ET on Wednesday, marking one of the most highly anticipated rate decisions in recent memory.

Financial markets now estimate a 96% probability that the Fed will cut its benchmark rate by a quarter percentage point, taking it to a range of 4% to 4.5%.

Mortgage rates have already fallen in anticipation of the move, with the average 30-year fixed rate reaching an 11-month low of 6.35% last week.

However, for those who are holding out in expectation that mortgage rates will automatically fall further after the FOMC meeting, disappointment may await.

The economist Hale says that markets are already pricing in fairly aggressive future Fed cuts, raising risks to the upside if policymakers issue more hawkish guidance than expected.

"After the Fed meeting," she says, "I expect that mortgage rates are more likely to steady or even edge higher because markets are positioned to expect relatively more easing and could be disappointed by the Fed’s forward guidance.”

In a call with reporters last month, National Association of Realtors® Chief Economist Lawrence Yun also warned that higher inflation and concerns about mounting government debt could put upward pressure on mortgage rates, despite the Fed easing.

"Mortgage rates may not decline, even with the Fed rate cut, if there is high inflation, and also if somehow the Treasury debt issuance becomes large," he said. "That's going to prevent the mortgage rate from meaningfully declining."