Fed Nominee Warns: Political Control Could Undermine Economic Stability

Stephen Milan, a nominee for the U.S. Federal Reserve Board of Governors, has emphasized the importance of central bank independence in maintaining economic stability. Speaking ahead of a Senate Banking Committee hearing, Milan underscored that the Federal Reserve’s ability to operate free from political influence is essential to achieving its mandate of controlling inflation and preventing economic downturns. In his pre-submitted testimony, Milan stated that monetary policy independence is a “key element to success” and that his decisions, if confirmed, would be grounded in macroeconomic analysis and long-term public interest [3].

Milan’s remarks come amid growing scrutiny over the Federal Reserve’s evolving role in financial regulation, particularly in overseeing large financial institutions and managing the composition of its balance sheet. While acknowledging the central bank’s expanded responsibilities, he questioned whether these extend beyond its core dual mandate of price stability and maximum employment. “The ultimate composition of the Fed’s balance sheet is an open question,” Milan noted, highlighting concerns about the boundaries of its oversight [3].

Despite the importance of maintaining Fed independence, some political figures, including President Trump, have suggested increased presidential influence over monetary policy. Milan, however, has explicitly opposed such a shift. In a separate statement, he stated that he does not recommend handing control of the Fed to the president, affirming the necessity of a central bank that is “independent and free from political pressures” [2]. This stance aligns with his earlier comments, where he pointed out that the president nominated him because of shared policy views, but emphasized that if confirmed, he would act independently [1].

The debate over Fed independence is occurring at a critical time, as the Federal Reserve faces mounting pressure to address persistent inflation and potential economic slowdowns. Recent market data indicates a 97.6% probability of a rate cut in September 2025, with expectations of gradual reductions in interest rates in the coming months [1]. While Milan did not directly comment on the timing of future rate adjustments, he expressed uncertainty about the future of monetary policy, noting that decisions must be based on economic fundamentals rather than political considerations [1].

Milan’s views also touch on the broader implications of executive influence in economic policy. He acknowledged that the president has the right to express views on monetary policy but stressed that these should not translate into direct control over the Fed’s operations. This line of reasoning reinforces the traditional separation between fiscal and monetary policy in the U.S. economic framework [2].

As the Senate prepares to deliberate on Milan’s nomination, the Federal Reserve’s role in maintaining economic stability continues to be a focal point of national discussion. The nominee’s emphasis on independence reflects a longstanding principle in U.S. economic governance, one that many believe is critical to the Fed’s credibility and effectiveness in navigating complex financial environments [1].

Source:

[1] The Federal Reserve Board nominee emphasizes ... (https://www.chaincatcher.com/en/article/2203332)

[2] Federal Reserve Board nominee Stephen Milan (https://m.odaily.news/en/newsflash/446644)

[3] Fed governor nominee Milan pledges to uphold central ... (https://www.odaily.news/en/newsflash/446472)