Some early reaction to President Donald Trump’s decision to appoint the chair of his Council of Economic Advisers, Stephen Miran, to a temporary vacancy on the Federal Reserve board of governors.
Paul Ashworth, the chief North America economist at Capital Economics, has described it as a “welcome surprise”.
“Miran has been linked with the push for a so-called Mar-a-Lago currency accord, based on a paper he wrote laying out various strategies for rebalancing US trade while working in the private sector,” Ashworth notes.
“We don’t always agree with him on economic policy, but the Harvard-educated PhD economist is a good pick, who should easily be confirmed by the Senate. With the Senate currently on its summer break, however, he might not be confirmed in time to vote at the mid-September FOMC meeting.
“He is initially only being tapped to complete Kugler’s existing term as Governor, which ends in late-January next year. But, assuming he enthusiastically votes for the interest rate cuts that Trump desperately wants, he should be renominated for a new term to follow that.”
But, as Reuters reports, many economists, market analysts and politicians may be wary of his appointment because of his recent views about reducing the independence of the Fed.
“In a report last year co-authored by Miran for the Manhattan Institute, the economist proposed a sort of homeopathic cure for a series of ills he felt had infected the central bank, from ‘groupthink’ on monetary policy, to regulatory overreach, to a loss of accountability and a loss of focus on its core mission of fighting inflation,” the news agency observes.
“To regain the benefits of Fed independence from political control, Miran wrote, that independence would have to end.
“Rather than 14-year terms and protection from removal once appointed, Miran proposed, Fed governors would serve eight year stints and be subject to removal at will by the president.
“‘We recommend shortening board member terms and clarifying that members serve at the will of the US president, as well as imposing bans on the revolving door between the executive branch and the Fed,’ Miran wrote.”
It could be another interesting confirmation hearing in the US Senate.