JPMorgan Warns Trump Fed Pick Could Threaten Central Bank Independence

JPMorgan analysts have warned that President Donald Trump’s appointment of Stephen Miran to the Federal Reserve board could signal a broader effort to erode the central bank’s independence, raising concerns about the potential for politically driven changes to the Federal Reserve Act. In a note led by chief economist Bruce Kasman, the firm highlighted key proposals from Miran, including granting the president at-will authority to remove Fed officials, transferring the Fed’s regulatory oversight to the Treasury, and allowing Congress to control the Fed’s operating budget. Such measures, if enacted, could significantly increase executive influence over monetary and regulatory policy [1].

The analysts emphasized that while Miran’s appointment appears to follow standard procedure, it is accompanied by a reform agenda that could reshape the Fed’s long-standing role and independence. Miran previously argued in a 2024 paper that the Fed suffers from “groupthink” and mission creep, suggesting that structural changes would enhance its independence. JPMorgan, however, views these proposals as a threat to the Fed’s autonomy rather than a means to preserve it. The firm noted that these changes would require congressional approval, but warned that the mere possibility of reform could pressure the Fed to adopt a more dovish stance in anticipation of political expectations [1].

The Federal Reserve’s independence has historically been a key factor in its ability to manage economic stability without political interference. However, the appointment has reignited concerns that political figures may attempt to reshape the Fed’s mission or authority to align with short-term economic goals. Wharton finance professor Jeremy Siegel has previously suggested that Fed Chair Jerome Powell might need to resign to protect the institution’s long-term independence, particularly if economic performance becomes a political liability [1].

Sen. Bernie Moreno, R-Ohio, has also expressed openness to amending the Federal Reserve Act, including changes to the interest paid on bank reserves and the Fed’s dual mandate. While Moreno stated he supports central bank independence, his willingness to consider reforms suggests the debate over the Fed’s role is far from settled. JPMorgan noted that the Fed currently retains support in the Senate, where amendments to the Federal Reserve Act would require 60 votes to overcome a filibuster. Nevertheless, the analysts cautioned that the Fed will likely take the threat to its independence seriously and may adopt a more accommodating posture toward political demands [1].

The potential for a dovish shift in Fed policy comes amid ongoing pressure from the Trump administration to lower interest rates. This pressure is compounded by concerns over inflationary effects from Trump’s proposed trade policies. The Fed’s independence is meant to insulate it from such pressures, but JPMorgan warned that the administration’s agenda could create a bias toward monetary easing and lighter regulatory oversight. This could, in turn, affect financial markets, where uncertainty over the Fed’s independence may lead to volatility and reduced investor confidence [1].

Senior economist Michael Pugliese of Wells Fargo noted that while political interference in the Fed is unlikely in the near term, the debate over its independence will continue. He pointed out that both Democrats and Republicans have reasons to preserve the filibuster, which currently acts as a barrier to major changes in the Federal Reserve Act. However, if political dynamics shift, the Fed’s long-standing autonomy could face further challenges. For now, Pugliese believes that congressional support for the Fed’s independence remains strong, though the broader political climate remains unpredictable [1].

As the Fed moves forward with its current strategy, it must navigate a delicate balance between maintaining its independence and responding to political pressures. JPMorgan’s analysis underscores the importance of institutional safeguards in preserving the Fed’s role as a nonpartisan, data-driven institution. The firm’s warning serves as a reminder that the Fed’s credibility and effectiveness depend not only on its leadership but also on the legal and political environment that supports its autonomy [1].

Source:

[1] Fortune, [https://fortune.com/2025/08/09/trump-fed-pick-stephen-miran-existential-threat-central-bank-independence/](https://fortune.com/2025/08/09/trump-fed-pick-stephen-miran-existential-threat-central-bank-independence/)