“That’s not a good place to be,” said KPMG chief economist Diane Swonk, adding that there were worries about both inflation and a recession.
“It’s the stagflation reality that we’re living in now,” she said, even if it is just a “mild bout”. This refers to a situation of sluggish growth and rising prices.
Fed governors Christopher Waller and Michelle Bowman, who voted against the FOMC’s last decision to hold rates steady – instead seeking a rate cut – could now dissent in favour of a bigger 50 basis points reduction.
Miran could also join them, analysts say.
But officials like Kansas City Fed President Jeffrey Schmid might dissent in the other direction, pushing to keep rates unchanged to curb inflation.
“It could be the first meeting where three governors dissent since 1988,” said Deutsche Bank economists in a recent note.
Since its last cut in December, the Fed has held interest rates at a range between 4.25 per cent and 4.50 per cent.
“POLITICAL ATTENTION”
Miran’s confirmation – without resigning from the CEA – also risks a sense of political influence over Fed decisions, EY chief economist Gregory Daco told AFP.
Economists will be monitoring the outcome of the FOMC’s vote and whether Miran pushes for a large rate cut that Trump has repeatedly advocated for.
Separately, the legal battle of Cook – the first Black woman on the Fed’s board of governors – could have broader implications for the bank.
A federal appeals court ruled late Monday that Cook could remain in position while challenging her removal over alleged mortgage fraud.
But the Trump administration plans to appeal this outcome, potentially bringing the case to the Supreme Court.
“The backdrop that we’re experiencing, where there is increased political attention on the Fed, is concerning,” Daco said.
“History has showed that in times when a central bank is under political influence, the economic outcomes are suboptimal,” he added.
This could mean higher inflation, lower growth and more financial market volatility.
