Leadership limbo means an unpredictable Fed meeting is ahead
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Illustration: Brendan Lynch/Axios
Usually, in previewing a Federal Reserve policy meeting, the big questions are around what the Federal Open Market Committee will do and say.
- For the meeting that begins Tuesday, we don't even know for sure who will be in the room.
Why it matters: The leadership of the world's most important central bank is in flux in ways never seen in the Fed's century-plus history.
- It probably won't affect the interest rate decision due out next week — almost certainly a quarter-point rate cut — but decisions made by courts and the U.S. Senate in the coming days could shape the institution far into the future.
State of play: Senate Republicans are seeking to confirm White House economic adviser Stephen Miran as a Fed governor on Monday, which would allow him to join the FOMC meeting that begins Tuesday morning.
- Most people spend their first day in a new job getting their building badge and filling out HR forms; Miran is on track to spend his first day helping determine the cost of money for a $30 trillion economy.
- Meanwhile, the court battle over whether President Trump can fire governor Lisa Cook has been fast-tracked.
- A district court judge this week ruled that Cook can remain in place while her ultimate fate is litigated. The court hearing the Trump administration's emergency appeal asked for the parties to file responses by Sunday afternoon. That sets up a potential appeals court ruling by Tuesday.
The big picture: Both situations could establish new precedents for the central bank's leadership.
- Miran is defying tradition by remaining a White House employee — going only on unpaid leave — while serving as a Fed governor.
- If he is confirmed Monday, it will have taken place with remarkable speed: just over five weeks between the announcement and Senate confirmation. Normally, that takes months.
- If the courts rebuff Cook's efforts to remain in place, it would illustrate that the president can remove Fed governors for cause even when that supposed cause hasn't been litigated.
Between the lines: Historically, newly installed Fed officials do more listening than talking at their first few FOMC meetings, taking time to learn how the institution operates before taking any bold stands.
- The circumstances of Miran's appointment and his past writings suggest he might be a different type of governor. He has accused the Fed of groupthink, calling for more vibrant debates.
- It would be unsurprising, for example, if he dissented at next week's meeting, preferring to cut interest rates by more than the 0.25 percentage point that the policy committee is likely to deliver.
- It is also plausible that he could come in hot with public comments or media appearances after the Fed's customary blackout period ends Friday.
