The Fed Just ‘Trump-Proofed’ Itself with a Unanimous Move
However, this move has been met with surprise and relief in the markets. The Federal Reserve’s early reappointment of its regional bank presidents has eased concerns about the central bank’s independence.
Meanwhile, President Donald Trump has been demanding steeper rate cuts, which raised concerns about a potential leadership shake-up. The reappointments of 11 out of 12 bank presidents were announced on Thursday.
What Does This Mean for the Fed?
In addition, the Fed’s board of governors approve the nominations, which gives them a significant amount of power. The rate-setting Federal Open Market Committee is composed of the seven members of the Fed board, plus five of the 12 Fed presidents.
Consequently, the reappointments take a risk off the table that the president or his appointment of a new chairman might disrupt the structure and governance of the system. Robert Eisenbeis, a former director of research at the Atlanta Fed, told Fortune via email that the reappointments “takes a risk off the table that the president or his appointment of a new chairman might disrupt the structure and governance of the system going into 2026.”
What’s Next for the Fed?
Moreover, the Fed board consists of three Trump appointees, and Jerome Powell’s term as chair is up in May. Meanwhile, the Supreme Court will consider whether Trump can fire governor Lisa Cook, which could allow Trump to name a fourth governor.
In addition, Justin Wolfers, a professor of public policy and economics at the University of Michigan, was more blunt about the Fed’s surprise news. “If I’m reading this properly, they just Trump-proofed the Fed,” he wrote in a post on X.
What Does This Mean for the Markets?
However, the 10-year Treasury yield edged higher after the Fed’s reappointment announcement, as bond investors priced in fewer rate cuts. Deutsche Bank strategist Jim Reid pointed out in a note on Friday that the advance announcement suggests the board was united in wanting to avoid the risk that the reappointment process raises questions over Fed independence.
Conclusion
Therefore, the Fed’s unanimous decision to bring back the Fed presidents suggests the Trump-appointed governors went along with it as well. That includes Stephen Miran, who is on leave as the White House’s chair of the Council of Economic Advisers while filling a vacancy on the Fed.
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