JPMorgan Warns Trump's Fed Nominee Signals Shift Toward Dovish Policy

JPMorgan has expressed concern over U.S. President Donald Trump’s nomination of Stephen Miran to the Federal Reserve Board, viewing the move as a potential signal of broader efforts to reshape the legal framework governing the central bank. Miran, currently serving as the chair of the White House Council of Economic Advisers, is expected to fill the seat vacated by Adriana Kugler, who stepped down before her term was set to end in January 2026. JPMorgan analysts suggest that Trump’s selection may be part of a larger strategy to alter the Federal Reserve Act, the law that defines the Fed’s powers and independence [1].

Miran has previously co-authored a 2024 paper outlining sweeping reforms to the Fed, including proposals that would grant the president the authority to remove board members and regional bank presidents at will, transfer oversight of banks and markets to the Treasury Department, and give Congress control of the Fed’s budget. JPMorgan argues that such changes could significantly increase political influence over U.S. monetary and regulatory policy [2]. The firm disputes Miran’s claim that these reforms would protect the Fed’s independence, stating instead that the main threat to the Fed’s autonomy stems from politically motivated changes to its legal structure.

The analysts note that while congressional approval would be necessary to enact Miran’s proposed reforms, there is currently no clear indication that lawmakers are ready to support such extensive changes. However, the fact that Miran is entering the Fed with a detailed reform agenda raises concerns about the potential for long-term structural shifts in the central bank’s governance and operations [3]. A Trump administration official has emphasized that Miran’s pre-appointment statements do not reflect official policy positions, but the timing and nature of his nomination continue to fuel speculation about the administration’s intentions.

JPMorgan has revised its forecasts in response to the nomination, now anticipating a quarter-point rate cut at the September Federal Open Market Committee (FOMC) meeting and up to four rate cuts in the near term. The firm attributes this shift to the expectation that Miran’s influence will push the Fed toward a more dovish monetary policy stance. The central bank has traditionally operated with a degree of autonomy from political pressures, but Miran’s nomination has sparked debate about whether this norm will hold under the current administration [4].

Miran’s views on the Fed have also drawn attention for their potential to deepen internal divisions. As an economist who has criticized the central bank for “groupthink” and mission drift, his appointment could intensify ideological differences among the board, particularly with more dovish members. JPMorgan’s economists suggest that the Fed may need to respond to these challenges by seeking to defend its independence through strategic concessions to the White House and Congress [5].

Trump’s choice of Miran aligns with the administration’s broader economic agenda, which includes calls for lower interest rates and reduced regulatory oversight. Miran’s past work, including a proposal dubbed the “Mar-a-Lago Accord,” focused on reducing the U.S. trade deficit and limiting the Fed’s role in financial regulation. These positions are consistent with Trump’s long-standing support for deregulation and fiscal stimulus [6].

While the Fed’s independence remains a key pillar of U.S. monetary policy, JPMorgan analysts warn that the nomination signals a potential turning point in the central bank’s relationship with the executive branch. If confirmed, Miran could accelerate the push for a more dovish stance, further shaping the Fed’s trajectory in response to White House pressures. The market has so far reacted cautiously, with only modest movements in the U.S. dollar following the announcement, but analysts remain watchful for further developments [7].

Sources:

[1] Mitrade, https://www.mitrade.com/au/insights/news/live-news/article-3-1026529-20250810

[2] inkl, https://www.inkl.com/news/trump-s-pick-for-the-fed-fuels-an-existential-threat-as-central-bank-independence-is-targeted-jpmorgan-says

[3] TipRanks, https://www.tipranks.com/news/jpmorgan-chase-jpm-now-expects-three-rate-cuts-from-the-fed-in-2025

[4] Banking Dive, https://www.bankingdive.com/news/federal-reserve-stephen-miran-trump-powell-kugler-waller-bowman-tariff-interest-rate/757226/

[5] The Economic Times, https://m.economictimes.com/markets/stocks/news/j-p-morgan-brings-forward-fed-rate-cut-forecast-to-september/amp_articleshow/123200236.cms

[6] New York Post, https://nypost.com/2025/08/08/business/jpmorgan-predicts-fed-will-cut-rates-in-september/

[7] MSN, https://www.msn.com/en-us/money/markets/jpmorgan-says-it-now-sees-four-fed-rate-cuts-on-the-horizon-as-trump-nominates-miran-to-fed/ar-AA1Kb4i7