On Thursday, the Fed announced the reappointment of regional Fed presidents. A move that usually flies under the radar, but this time it has drawn close scrutiny given pressure from Donald Trump.
Hunting the hawks
The 7 Fed governors approved the reappointment of 11 regional bank presidents for 5-year terms. The decision was unanimous. That means even Stephen Miran, a White House adviser serving temporarily as a governor, voted in favor.
Only Raphael Bostic was not renewed. The Atlanta Fed president had announced he would retire early next year.
This year, the process concluded earlier than in any period since at least 2006, according to the US central bank's records. The compressed timeline reveals the pressure on regional Fed presidents.
For several months, the Trump administration has appeared intent on exerting greater control over these appointments-as with governors, who are directly appointed by the president. Treasury Secretary Scott Bessent has also faulted regional Fed presidents for not being from the districts they oversee.
If they are in the executive's sights, it is likely because they are the most reluctant to cut rates. There are more hawks amongst them than amongst the governors. This week, the two votes for a hold (thus against the 25bp cut) came from Austin Goolsbee (Chicago Fed) and Jeff Schmid (Kansas City).
The Fed eludes him
The reappointment of regional Fed presidents is, in any case, another door closing on Donald Trump's attempt to exert greater control over the Fed.
Earlier this year, he fired Governor Lisa Cook, before being blocked by the courts. The Trump administration then took the case to the Supreme Court. The hearing is expected in January.
But it seems unlikely that Donald Trump will ultimately have the ability to fire Fed officials. Earlier this year, Supreme Court justices issued an opinion on the removal of officials at independent agencies, in which they noted that "the Federal Reserve is a quasi-private entity with a unique status".
These attempts by Donald Trump raised fears of a loss of the Fed's independence. Independence is a key asset for a central bank. For now, the guardrails seem sufficient to avoid this risk.
Finally, the latest meeting also showed that the Fed is divided. We are in a period with upside risks on both sides of the mandate (inflation and unemployment). Some members are more concerned about rising inflation, others about rising unemployment instead.
In this context, even a Fed chair appointed by Donald Trump cannot single-handedly deliver the rate cuts the president wants. As Scott Bessent recently acknowledged: "The chair of the Federal Reserve can start the discussion, but in the end, he has only one vote."
