Start "Federal Reserve MAGA-fication"? Trump has chosen the chief designer of the "Mar-a-Lago Agreement"

U.S. President Donald Trump has nominated his chief economic advisor Stephen Miran to the Federal Reserve Board, officially taking the first step in reshaping the Federal Reserve.

On Thursday local time, Trump announced via his social media platform that he would nominate Stephen Miran, the chairman of the White House Council of Economic Advisers, to fill the Federal Reserve Board seat vacated by Adriana Kugler's early resignation. Trump praised Miran's expertise in economics as "unparalleled" and stated that he has "been with me since the beginning of my second term." Kugler's term was originally set to end in January 2026.

Miran has written influential papers on the "Mar-a-Lago Accord," advocating that the U.S. should take measures to lower the long-term value of the dollar. Additionally, he has publicly questioned the independence of the Federal Reserve and supported significant reforms, including allowing all Federal Reserve officials to vote at every meeting and granting the White House the authority to dismiss central bank officials at any time.

This nomination is seen as Trump's first substantive action to reshape the leadership of the Federal Reserve during his second term. Analysts believe that Miran's addition will provide a strong supporter for Trump's calls for interest rate cuts and financial deregulation within the FOMC, undermining the authority of current Chairman Jerome Powell and accelerating the "MAGA-ization" process of the Federal Reserve.

However, Miran's appointment is only temporary. Trump indicated that he plans to nominate a second candidate for the board in January, with a 14-year term, who is expected to succeed current Federal Reserve Chairman Powell.

There are differing views in the market regarding whether Miran will participate in the September Federal Open Market Committee meeting. Some analysts believe that due to the Senate confirmation process typically taking 4-8 weeks, coupled with the Senate's August recess, the new board member is unlikely to be in office in time for the September meeting. However, some investors think this could be a recess appointment that does not require Senate confirmation.

Proposer of the "Mar-a-Lago Accord," has repeatedly questioned the Federal Reserve

Stephen Miran is an economist who graduated from Harvard University. Before serving as the chairman of the CEA in Trump's second administration, he was a senior advisor at the Treasury Department during Trump's first term. His most well-known policy proposal stems from an influential paper he published in November 2024.

In that paper, Miran envisioned a trade and monetary agreement he called the "Mar-a-Lago Accord," which centers on advocating that the U.S. should take measures to lower the long-term value of the dollar. Although Miran later stated that the paper does not represent government policy, it has become a distinctive label for his personal policy inclinations.

More notably, he has publicly questioned the independence of the Federal Reserve. In a column titled "The Federal Reserve Is Not as Independent as It Seems" written for Barron's in 2024, Miran explicitly pointed out that "the wall between fiscal and monetary policy has partially broken down, and the independence of the central bank has been exaggerated." He believes that the Federal Reserve has never truly been isolated from other government departments, especially the Treasury This viewpoint is consistent with his recent statements on social media, where he defended Trump's pressure on the Federal Reserve to cut interest rates, claiming that the president has a "remarkable record in both dovish and hawkish directions" on interest rate issues.

Miran also believes that the Federal Reserve adopted an overly flexible inflation target in 2022, ultimately damaging its credibility and putting it on "thin ice." He warned that if the central bank fails to properly fulfill its responsibilities, it "will face the risk of Congress revising the Federal Reserve Act or future presidents using this as a reason to dismiss board members."

In 2023, when high interest rates led to the sudden collapse of Silicon Valley Bank, Miran criticized the Federal Reserve again. He pointed out that the Fed's policies "have created an expectation in the market that regardless of how high inflation is, it will take aggressive easing measures whenever the economy faces downward shocks."

Advocated Comprehensive Reform of the Federal Reserve

Before joining the current administration, Miran co-authored a far-reaching report in 2023 for the Manhattan Institute with his co-author Daniel Katz (currently Chief of Staff to Treasury Secretary Scott Bessent), proposing a series of radical reform proposals for the Federal Reserve.

The report criticized the notion that officials with political experience can make unbiased decisions as a "pretense." They argued that "pretending that one can easily switch between highly politicized and supposedly non-political roles without allowing political bias to influence policy is, at best, naive, and at worst, insidious."

The structural reform blueprint proposed in the report includes:

All Federal Reserve officials—including all regional Federal Reserve Bank presidents—should have voting rights at every FOMC meeting.

State governors should gain control over local oversight committees that select regional Federal Reserve Bank presidents.

All senior Federal Reserve officials—including board members and regional Federal Reserve Bank presidents—should be subject to dismissal by the White House at any time.

Board members should be prohibited from serving in the executive branch for four years after their term ends.

The Federal Reserve's operating budget should be appropriated by Congress, rather than remaining independent as it is now.

Mixed Reactions on Wall Street, Focus on September FOMC Meeting

Wall Street's reaction to Miran's nomination has shown clear divisions. Some investors believe he will be beneficial for the market, while others express concerns about his qualifications and political stance.

Tom Di Galoma, Managing Director at Mischler Financial, believes that Miran's addition is a "good thing" for the Federal Reserve because he "may lean towards lowering interest rates." John Velis, an Americas macro strategist at BNY Mellon, also thinks that Miran is likely to be a "reliable dove."

However, Andrew Brenner, Head of International Fixed Income at NatAlliance Securities, bluntly stated that Miran is "highly controversial" and questioned whether he could pass Senate confirmation, citing that he "has no market experience, no business experience, and is always involved in politics." Regarding whether Miran can attend the FOMC meeting in September, market opinions are divided.

Barron's pointed out that the nomination requires Senate confirmation, a process that could take 4 to 8 weeks, making it "unlikely" for him to be in place in time. However, Velis from Bank of New York Mellon believes this could be a "recess appointment," thus not requiring Senate confirmation.

In any case, most analysts, such as Ryan Sweet from Oxford Economics and Marc Chandler from Bannockburn Global Forex, stated that this nomination would not change their expectations for an imminent rate cut by the Federal Reserve.

The Beginning of "MAGA-fication" of the Federal Reserve?

If confirmed, Miran will succeed Kugler for the remainder of his term until the end of January next year. This means he may only have a few opportunities to vote in interest rate decision meetings. Given the signs of economic cooling, the likelihood of the Federal Reserve cutting rates in September is already high, so Miran's addition may have limited direct impact on the short-term interest rate path.

Despite the potentially short term, Trump's nomination of Miran is seen as the beginning of his effort to reshape the Federal Reserve's long-term agenda.

Unlike some of Trump's nominees during his first term, Miran is viewed as a representative fully committed to the MAGA cause. During his time in the White House, he published analytical reports asserting that despite tariffs, the prices of imported goods were still declining, experiences that have prepared him for future debates at the FOMC.

At the July meeting, two Trump-appointed governors already voted against the immediate rate cut. Miran's addition will strengthen this "dovish coalition," accelerating the end of the Federal Reserve's decades-long tradition of striving to communicate with "one voice."

Media commentary indicates that Miran's joining the Federal Reserve carries significant symbolic meaning, bringing a firm "MAGA perspective" into the Federal Open Market Committee, and is interpreted as the beginning of Trump's systematic infusion of his economic ideas into the U.S. central bank, signaling a profound shift in the Federal Reserve's operational methods and policy discourse