Fed Meets With New Gov., Another Trump Wants Out

After a late-night vote and last-minute ruling, the Federal Reserve began a key meeting on interest rate policy Tuesday with both a new Trump administration appointee and an official the White House has targeted for removal.

Stephen Miran, a top White House economist who was confirmed by the Senate with unusual speed late Monday, was sworn in Tuesday as a member of the Fed's board of governors. He will vote on the Fed's interest rate decision on Wednesday, when the central bank is expected to reduce its key rate by a quarter-point. Miran may dissent in favor of a larger cut.

Also attending the meeting is Fed governor Lisa Cook, whom the Trump administration has sought to fire in an unprecedented attempt to reshape the Fed, which historically is considered independent of day-to-day politics. An appeals court late Monday upheld an earlier ruling that the firing violated Cook's due process rights. A lower court had earlier also ruled that President Donald Trump did not provide sufficient “cause” to remove Cook.

The Fed on Wednesday is widely expected to cut its key rate by a quarter point to about 4.1%, which would be the first reduction since last December. The central bank reduced rates three times last year because, like now, it worried that job gains were weakening and unemployment was rising.

Some borrowing costs, such as mortgage rates, have already declined in anticipation that the Fed will start cutting rates this week. Should the Fed reduce borrowing costs again at its next meetings in October and December, rates on mortgages, car loans, and credit cards could decline further.

With both Cook and Miran in place, the Fed’s two-day meeting could be unusually contentious for an institution that typically prefers to operate by consensus.

It’s possible that as many as three of the seven governors could dissent from a decision to reduce rates by just a quarter-point in favor of a half-point. That would be the first time since 1988 that three governors have dissented. Economists also say that one of the five regional Fed bank presidents who also vote on rates could dissent in favor of keeping rates unchanged.

On Tuesday, the White House said it would appeal Cook's case to the Supreme Court, though did not specify when.

“The President lawfully removed Lisa Cook for cause,” White House spokesman Kush Desai said. "The Administration will appeal this decision and looks forward to ultimate victory on the issue.”