Fed Governor Stephen Miran to resign as Kevin Warsh prepares to take over as Fed chair – Firstpost

Federal Reserve Governor Stephen Miran said on Thursday he will resign from the central bank’s board on or shortly before Kevin Warsh is sworn in as the next chair of the US Federal Reserve, paving the way for President Donald Trump to install his preferred pick at the top of the central bank.

Miran’s departure was necessary because there was no vacant seat available on the Fed’s seven-member Board of Governors for Warsh to occupy. Miran had been serving the remainder of former governor Adriana Kugler’s term, which technically expired in January.

In a resignation letter released by the Federal Reserve, Miran defended his push for lower interest rates and reiterated criticisms he had repeatedly voiced during his short but contentious tenure at the central bank. Since joining the Fed board last September after taking leave from the Trump administration, Miran dissented at every Federal Open Market Committee meeting, arguing for deeper or faster rate cuts than the committee ultimately approved.

Miran said the Fed needed to better account for what he described as “nonmonetary forces” affecting inflation, including lower immigration and deregulation, which he argued were helping ease price pressures in the economy.

He also questioned the accuracy of some inflation measurements, warning that distortions tied to portfolio management fees and the rapid expansion of artificial intelligence-related software spending may be overstating inflation data.

“While there’s always measurement error in inflation, a severe problem arises when those errors grow over time,” Miran wrote in the letter. “If the Federal Reserve doesn’t adjust for these errors, it will run unemployment higher than it has to, fighting fake rather than real inflation.”

Miran further argued that monetary policy works with a lag and that policymakers should take a more forward-looking approach while setting interest rates.

Warsh’s nomination as Fed chair was confirmed by the US Senate earlier this week, though the date for his swearing-in has not yet been announced.

The transition marks a significant reshaping of the Federal Reserve under Trump, who has repeatedly criticised the central bank for keeping borrowing costs too high and slowing economic growth. Warsh, a former Fed governor and longtime Wall Street figure, is widely seen as more aligned with the administration’s preference for looser monetary policy.

Miran’s appointment itself had sparked criticism from some economists and ethics watchdogs because he initially took only a leave of absence from his role as chairman of Trump’s Council of Economic Advisers instead of resigning outright. Critics argued that the arrangement blurred the line between White House political influence and central bank independence.

He later resigned from the White House role after testifying during his Senate confirmation hearing that he would do so if his stay at the Fed extended beyond a temporary period.

During his time at the Fed, Miran consistently pushed for more aggressive easing. At first, he advocated cutting interest rates by twice the amount approved by the committee. In later meetings, he favoured quarter-point reductions even as most policymakers voted to hold rates steady amid lingering inflation concerns.

His exit now clears the final obstacle for Warsh to formally assume leadership of the Federal Reserve at a time when markets are closely watching the direction of US monetary policy, inflation trends, and the outlook for the world’s largest economy.

With inputs from agencies.