'0.25% cut' expected as FOMC begins, Lisa Cook and Steven Myron attend simultaneously

Base rate almost certain to be cut by 0.25%p

Cook's dismissal stayed on appeal and Myron confirmed by the Senate

The Federal Open Market Committee (FOMC) of the U.S. Federal Reserve will meet for two days on the 16th and 17th local U.S. time.

This meeting is expected to see the first 25 basis point (1bp=0.01%) policy rate cut since last December. In that case the federal funds rate would fall to the 4.00%~4.25% range.

Also attending the meeting are Fed Governor Lisa Cook, who was dismissed by President Trump but reinstated by a court ruling, and Steven Myron, chair of the White House Council of Economic Advisers, who was confirmed by the Senate.

The U.S. Court of Appeals for the D.C. Circuit ruled 2-1 the previous day that Fed Governor Lisa Cook cannot be removed while she pursues litigation over President Trump's removal attempt. The appeals court ruled that Cook is likely to prevail on the claim that Trump's dismissal did not follow the constitutional due process required.

However, the judges did not address the central issue in the case of what 'cause' the president must have to remove a Fed governor.

The Fed said it would comply with the court's ruling, which enabled Governor Lisa Cook to attend the meeting.

Nevertheless, the Fed faces strong pressure from the White House to influence monetary policy, because Steven Myron, chair of the White House Council of Economic Advisers, has newly taken his seat as a governor. Myron was confirmed by the Senate 48-47 the previous day, officially joining the Fed Board.

Accordingly, of the Fed's seven governors, three are Republican appointees — the existing Christopher Waller and Michelle Bowman, and Myron.

The Fed is expected, as markets have anticipated, to cut the federal funds rate by 0.25% point to a 4.00~4.25% range. This is not the large rate cut that government officials such as President Trump or Scott Bessent desire.

However, due to the sharply deteriorated labor market conditions, expectations for further rate cuts are rising from the dot plot, which will indicate how many cuts may occur during the remainder of the year, and from Powell's press conference on the economic outlook.

Financial markets are focusing more on how the fallout from the Cook case will affect the Fed and the direction of monetary policy.

According to Reuters, Myron's way of carrying out his duties could be a good example of the Trump administration's central bank plans.

Myron, who will serve the remainder of Adriana Kugler's term, which ends on January 31 next year after her sudden resignation in early August, could exert significant influence through remarks on monetary policy, improvements to Fed operations, and the economic situation.

Nevertheless, Fed meeting participants are expected to focus on a slowing labor market and inflation that still exceeds the Fed's 2% target.

Analysts expect that most FOMC participants will agree on a rate cut at this meeting, as Jerome Powell already mentioned at last month's Jackson Hole meeting

Guest reporter Jeongah Kim kja@hankyung.com