Current CEA director Stephen Miran has been nominated last week by Trump for the remainder of the Fed governor term of Kugler, ending in January 2026. Miran is likely to be an extreme dove, consistent with Trump’s desire for lower rates. As of now the WH is saying this is a short-term position, but there are a great many moving parts to position before all is settled about the BoG. The scenarios are dependent on resignations and the timing of resignations as well as what the WH wants and when. With this nomination, the WH has maintained maximum optionality in the face of that uncertainty. Miran has argued that tariffs do not lead to inflation and has criticized Chair Powell for his reluctance to ease policy. Prior to becoming CEA chair, Miran wrote a widely discussed paper on macro policy (available in website research note section titled “A User’s Guide to Restructuring the Global Trading System”), claiming that the USD is overvalued and proposing several unorthodox policy options for the Fed to facilitate dollar depreciation. The Senate returns from the August recess on September 2. The FOMC meeting is September 16-17. Though this is an extremely tight timetable for a nomination hearing, a vote by the Banking Committee and a vote by the full Senate, we believe Trump might ensure that Miran is on FOMC BOG when Sep FOMC meets on 16th Sep. We believe the strongest candidate to lead the Fed amongst all current probable candidates is Waller. If our view is correct, we believe Miran might continue as full-time governor even post Jan’26. That implies a dovish troika of Waller, Bowman & Miran which will be a potent combination to tilt FOMC towards front loaded rate cuts in the next 6 months towards terminal rate of 3-3.25% by March’26. We believe Miran did not give up the chair of CEA just for a 4-month stint at Fed. Either there are more resignations coming up or Waller is the next Fed chair. For the immediate short term, Miran is likely to vote along with Bowman & Waller in the Sep FOMC for a 50-bps cut if the Aug NFP data surprises on the downside again.
