President Nominates Free-Market Economist to Federal Reserve Board

On August 7, the United States President announced the nomination of the current White House Economic Advisory Council Chairman, a free-market economist, to serve as a member of the Federal Reserve Board of Governors. This nomination fills the vacancy left by the early resignation of the previous member, whose term was originally set to end in January 2026.

This move marks the first opportunity for the President to make personnel adjustments to the Federal Reserve's leadership during his second term, paving the way for the implementation of his policy ideas within the monetary decision-making body. The nominee holds a Ph.D. in economics from Harvard University and is one of the President's most trusted advisors on trade policy. He is the primary drafter of the so-called "Mar-a-Lago Agreement," which provides the theoretical foundation and framework for the "Sunshine Tariff" policy promoted by the Trump administration.

The President expressed his support for the nominee's stance on urging the Federal Reserve to lower interest rates. In a recent social media post, the nominee stated, "For some, this may be inconvenient to accept, but the fact is that the President has an excellent record in both lowering and raising interest rates, while also promoting trade agreements, advancing tax reforms, and avoiding wars."

This nomination is expected to be a temporary arrangement. The President indicated that he will nominate another candidate in the near future to serve a full 14-year term beginning in January 2026, with the intention of grooming this individual as a potential successor to the current Federal Reserve Chairman. Both nominations require confirmation by the Senate, a process that typically takes 4 to 8 weeks and is expected to begin after the August recess. This means the new member is unlikely to participate in the September FOMC policy meeting.

Currently, the President is considering candidates for the long-term position, including former Federal Reserve Governor, economic advisor, and current Federal Reserve Governors. The Federal Reserve System is the central banking system of the United States, with the Federal Reserve Board of Governors serving as its core decision-making body. This body is responsible for formulating monetary policy, regulating financial institutions, and maintaining the stability of the financial system.

The Board of Governors consists of seven members, including the Chairman, two Vice Chairmen (one responsible for supervision and the other for monetary policy), and four regular members. All members are nominated by the President and must be confirmed by the Senate. The term for each member is 14 years, staggered to ensure that one member's term ends every two years, reducing political interference and ensuring the independence of monetary policy. The Chairman and Vice Chairmen serve four-year terms, which can be renewed with re-nomination.

Members can leave office voluntarily, be removed by the President for political reasons, or be replaced if they resign, retire, or become incapacitated. In such cases, the President can nominate a new member to serve the remaining term, but not a new 14-year term. The Board of Governors' primary functions include formulating monetary policy, regulating financial institutions, managing the payment system, and conducting economic research and data analysis. The Federal Open Market Committee (FOMC), which includes the seven members of the Board of Governors, the Chairman of the New York Federal Reserve, and four rotating regional Federal Reserve Chairmen, is responsible for setting interest rate policies and quantitative easing policies.

The FOMC meets eight times a year to determine interest rate policies, while the Board of Governors holds weekly meetings to discuss regulatory policies and bank compliance. Although the Federal Reserve is designed to be independent, political factors can influence the nomination of members. The President can indirectly influence monetary policy by nominating members who support either expansionary or contractionary policies. Congress can also exert pressure through hearings, and market expectations can be affected by changes in the Board of Governors, potentially leading to market volatility. The long-term stability of the Board of Governors, with its 14-year terms and staggered replacements, ensures policy continuity. However, short-term political influences can affect the direction of monetary policy, and changes in the Board of Governors, particularly the Chairman, can alter market expectations and interest rate paths. The Federal Reserve Board of Governors' operational mechanisms ensure the professionalism and independence of U.S. monetary policy, but personnel changes can have significant impacts on global financial markets.