President Trump's firing of Fed Governor Lisa Cook and her lawsuit have created an unprecedented challenge for the Federal Reserve, with a judge hearing arguments and no ruling yet. Board composition is shifting dovish with Stephen Miran nominated to fill a vacancy and joining Trump-appointed governors Christopher Waller and Michelle Bowman, who have dissented seeking lower rates. Jerome Powell's chair term expires in May, while his board term runs through 2028. A replacement for Cook could further tilt policy toward easing, prompt a reshuffle of regional Fed presidents, increase dissent at meetings, and raise the prospect of tie votes on the 12-member FOMC.
The Federal Reserve is in uncharted waters after President Donald Trump took the unprecedented step to fire Fed Governor Lisa Cook, potentially adding to the turnover among policymakers and an expected rise in split votes. That raises the question of what would happen if there was a tie on the Federal Open Market Committee. There has never been a tie vote on the rate-setting Federal Open Market Committee, but the Federal Reserve has also never been under attack like it is now.
Meanwhile, the composition of the Fed is changing, tilting the central bank more dovish. Trump has named Stephen Miran to fill a vacancy on the board left by Adriana Kugler, who left before her term was due to expire in January. Miran would join Trump-appointed governors Christopher Waller and Michelle Bowman, who cast dissenting votes at the last Fed meeting as they sought to lower rates. And Jerome Powell's term as Fed chairman expires in May, though it's uncertain if he plans to remain on the board of governors until his term in that seat expires in 2028.
If Trump is able to replace Cook, that would shift the balance even more toward easing-and potentially clear the way for a reshuffle of the Fed's regional bank presidents, who take turns serving on the FOMC. But even if the Fed cuts rates in September like Trump wants, it's unlikely to quiet the president as he has said rates should be more than 300 basis points lower than they are now. It sets up a possible new era of more contentious meetings at the Fed, which typically has been driven by consensus with even one dissenting vote being rare. Votes may be closer. And given that the FOMC has an even number of 12 members, that raises the question of what would happen in a tie vote.
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