Calming Fears Over Central Bank Independence

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Worries about central bank independence have been prevalent over the past year amid threats to Fed Chair Jay Powell’s job and a lawsuit against Lisa Cook aimed at removing her as a Fed governor. Wall Street Breakfast subscribers were particularly uneasy about the developments, with a majority expressing alarm over central bank independence, according to a recent SA Sentiment poll. Some of those concerns might have been eased overnight, as the Fed Reserve Board voted to reappoint all regional bank presidents.

Backdrop: President Trump has already been interviewing candidates to replace Powell as chairman when his term comes to an end in May 2026. While Powell could stay on as a Fed governor for another two years, that situation is not likely. Trump has also replaced Adriana Kugler with Stephen Miran, adding to picks like Michelle Bowman and Christopher Waller, meaning he will soon have nominated a majority of the Fed board, whose seven members are permanent members of the Federal Open Market Committee.

However… It’s the FOMC’s entire twelve-member committee that is responsible for setting the federal funds rate in the U.S., which influences everything from mortgage rates and car loans to credit cards and corporate balance sheets. The remaining five regional presidents are not selected by the president, but rather by directors of the individual banks, though they are subject to the approval of the Fed’s Board of Governors. Those worried about central bank independence feared the next battle could take place there, but that scenario never materialized.

Latest update: The Federal Reserve Board has unanimously reappointed all Federal Reserve Bank presidents, except for Atlanta Fed President Raphael Bostic, who previously announced plans to retire. The decision included votes from Trump appointees Miran, Bowman and Waller, helping reduce some concerns over selections based on loyalty or pre-determined policy outcomes. It’s also notable since the vote took place earlier than usual and will grant the regional Fed presidents new five-year terms, extending past President Trump’s second term in office.

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