Officials at the Federal Reserve gathered on Tuesday for a meeting unlike any other.
One governor, Stephen Miran, was just approved to serve on Monday. Another, Lisa Cook, has spent the past several days defending her right to participate after taking President Trump to court for trying to oust her.
Both will vote on interest rates on Wednesday. Mr. Miran, who was sworn in on Tuesday, will do so despite having missed all of the pre-meeting briefings. Ms. Cook has had to balance her preparation process with tracking her lawsuit making its way through the legal system. On Monday, she secured yet another victory, with a federal appeals court holding up a lower court’s decision to block Mr. Trump from removing her.
The dynamics heading into the two-day gathering are emblematic of the unusual circumstances that have engulfed the central bank as Mr. Trump has sought to wrest more control over the institution at a time when policymakers are making very difficult decisions about interest rates.
Officials on Wednesday are expected to lower borrowing costs for the first time in nine months, seeking to shore up the labor market despite signs that inflationary pressures are intensifying. Policymakers are likely to deliver a quarter-point cut, which would bring interest rates down to a new range of 4 percent to 4.25 percent. But the White House’s pressure campaign is likely to inject yet more uncertainty into the debate about how fast interest rates fall after that.
One big unknown is how fervently Mr. Miran, who is seen as being aligned with the president on the economy, will press for the steep interest rate cuts that Mr. Trump has repeatedly demanded. As chair of the Council of Economic Advisershe repeatedly echoed many of the president’s views, including that tariffs are not inflationary.
During his confirmation hearing, Mr. Miran said he supported the central bank’s ability to make policy decisions free of political influence and stressed that he would be guided by his “analysis of the macroeconomy and what’s best for its long-term stewardship.”
But Mr. Miran’s decision to take only a temporary leave of absence rather than resign from his White House role while serving at the Fed has raised concerns he would be beholden to the president, who would in theory remain his boss.
Mr. Trump on Tuesday was already relishing in having Mr. Miran at the Fed as he once again went after Jerome H. Powell, the Fed chair, for moving too slowly to lower interest rates.
“He’ll have a big influence on ‘Too Late’ getting his rates down,” the president said of Mr. Miran. “Too Late” is one of his favorite insults for Mr. Powell.
“The rate should be much lower,” Mr. Trump added. Asked about the Fed’s independence, he said, “They should listen to smart people like me.”
The Fed’s interest rate decisions are decided by all seven members of the Board of Governors as well as a rotating group of five presidents from the regional Reserve Banks, limiting the impact of a lone policymaker.
But Mr. Miran will have the opportunity to influence the Fed’s debate on interest rates from the start. He is likely to dissent from the central bank’s vote on Wednesday, instead favoring a larger reduction in interest rates than officials are currently poised to support. He could be joined by Michelle W. Bowman, whom Mr. Trump promoted to be vice chair for supervision this year. In July, she opposed the Fed’s decision to hold interest rates steady in favor of a quarter-point reduction.
Christopher J. Waller, another governor seen as a potential contender to become the next Fed chair when Mr. Powell’s term ends in May, also dissented in July and has called for a cut at this week’s meeting. But he has also signaled that he would support a quarter-point reduction, suggesting he would not oppose Wednesday’s vote.
This week’s meeting is one of four throughout the year when the central bank publishes projections from individual policymakers for interest rates, growth, inflation and unemployment. Mr. Miran’s estimates for interest rates are likely to be lower than his colleagues’, but it is unclear to what degree.
Another unknown is what will happen to Ms. Cook amid her legal battle with the president over his attempt to fire her based on unproven allegations that she committed mortgage fraud. The ruling by the federal appeals court on Monday cleared up much of the uncertainty surrounding her status as a governor while her case against Mr. Trump is being litigated.
Kush Desai, a White House spokesman, said Tuesday that the administration would appeal the decision.
“The president lawfully removed Lisa Cook for cause,” Mr. Desai said. “The administration will appeal this decision and looks forward to ultimate victory on the issue.”
But the administration is likely to appeal the decision, leaving Ms. Cook’s fate in the hands of the Supreme Court.
Many legal experts, economists and former government officials have said that if Mr. Trump succeeds in removing Ms. Cook, a key guardrail shoring up the Fed’s political independence would be obliterated. The president has spoken openly about wanting a majority of his loyalists on the central bank’s board, a degree of support that would give him much greater sway not only over interest rate decisions but the institution itself.
Tony Romm contributed reporting.
Colby Smith covers the Federal Reserve and the U.S. economy for The Times.
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