[Fed Watch] Possibility of a Clash Next Week at the FOMC Between 'Pro-Trump' Myron and 'Anti-Trump' Cook

Amid an ongoing power struggle between the White House and the central bank (Fed), the likelihood has grown that anti-Trump Fed Governor Lisa Cook and pro-Trump Steve Myron, chair of the White House Council of Economic Advisers (CEA), will clash at next week's monetary policy decision meeting (FOMC).

On the 9th, Judge Zia Cobb of the U.S. District Court in Washington DC accepted Cook's emergency injunction request yesterday, allowing her to retain her position on the Fed Board. Accordingly, Cook will be able to keep her voting rights at the FOMC scheduled for next week.

The White House has hinted at an appeal. It appears prepared to fight through the appellate court and even to the Supreme Court. To remove someone, there must be 'substantial cause,' and the mortgage fraud allegations against Cook, even if given considerable concession, remain allegations. Because they have not been confirmed through a formal investigation, there may be some legal advantage for her on this point. The federal district court also accepted the emergency order request for the same reason.

However, regardless of the outcome of the legal dispute, tensions between the U.S. administration and the central bank appear to be intensifying. On the 10th, the confirmation measure for Steve Myron, the successor to Adriana Kugler—who had earlier resigned under pressure before Cook— as chair of the Council of Economic Advisers passed the Senate Banking Committee.

If this confirmation is approved by the Senate floor by the 15th, he could attend the FOMC scheduled for the 16th to 17th. If so, there is a possibility that we could see both Governor Cook and Myron engage in a heated debate at the FOMC next week.

The PPI released that day suggested inflation that was not stronger than expected, and there are signs of a weakening labor market, so the Fed is likely to wrestle over the size of rate cuts at this FOMC. In particular, if Myron is confirmed and attends, he is expected to strongly push for a big cut together with existing Governor Christopher Waller and Vice Chair Michelle Bowman.

Washington=Correspondent Sang-eun Lee selee@hankyung.com