29 Sept 2025
President Trump has made a temporary appointment to a vacant Federal Reserve board seat, deferring a permanent selection to allow future administrations more flexibility in choosing a successor. Concurrently, the United States has confirmed the cessation of its 'stacking' tariff policy on Japan, though the ongoing lack of transparency in trade agreements continues to pose significant challenges for Japanese automakers.
President Trump decided to temporarily appoint Mr. Miran to the vacant Federal Reserve board seat until January, postponing the selection of a permanent replacement. This provisional appointment allows the incoming president more time to consider a successor to Chairman Powell from a broader pool of candidates, with Mr. Waller currently identified as the most probable long-term choice given his strong Fed background and high likelihood of Senate confirmation. Mr. Miran, possessing a PhD in Economics from Harvard and aligning with Trump's views, especially on tariffs, is expected to introduce a more diverse perspective on interest rate decisions, possibly advocating for cuts and potentially increasing dissenting votes in future FOMC meetings.
Mr. Miran advocates for substantial structural reforms within the central bank, proposing shorter terms for board members and clearer articulation that these members serve at the discretion of the President. His financial perspectives are equally radical, suggesting that a significant portion of the Federal Reserve's political involvement stems from Congressional funding, which should be eliminated. Miran, along with his colleague Mr. Katz, has directly questioned the fundamental value of central bank independence, contending that while it serves long-term objectives, it can also foster unaccountable power that ultimately damages the economy and market trust. They propose a stronger role for the executive branch in overseeing the Fed, effectively positioning it as an implementing agency.
The United States confirmed its decision to terminate the 'stacking' tariff policy previously applied to Japan, which involved imposing higher tariffs on items that already had lower rates while maintaining existing higher tariffs for others. While the US committed to reducing its tariffs as promised, it also stated that additional tariffs already collected from Japan would not be refunded, and no specific timeline for this resolution was provided. This persistent lack of transparency and the fluctuation in tariff policies create considerable difficulties for Japanese automakers, which are vital to Japan's economy, leading to complex planning challenges and significant financial losses, with some companies reportedly losing an estimated $679,000 per hour.
The uncertainties surrounding tariffs have profoundly affected major automotive companies. Toyota revised its annual profit forecast downward to approximately 3.2 trillion yen, attributing a 1.4 trillion yen loss directly to the tariffs. Despite the US announcement to end tariff stacking, the stock prices of Toyota and Hyundai only saw a modest increase of about 3%. Japan's domestic political pressures, including criticisms of the Prime Minister, escalating household costs, and the opaque nature of the trade agreement with the US, further compound the challenges faced by the Japanese auto industry. A timely reduction of the 27.5% tariff to the promised 15% would significantly alleviate pressure, but delays continue to detrimentally impact investment and long-term planning.
Federal Reserve officials delivered several speeches throughout the week, with Mr. Bostic emphasizing the structural and enduring impact of tariffs on inflation and economic growth. He also highlighted the necessity for the Fed to consider the consequences of government debt. Mr. Bostic indicated that one interest rate cut is appropriate for the current year, but stressed that all future monetary policy decisions remain data-dependent. Despite Mr. Bostic's generally hawkish stance, market expectations currently anticipate two interest rate cuts from the Fed.
The only notable economic data scheduled for release is the preliminary University of Michigan index for August. This index is categorized as 'soft data' and typically exerts less influence on the market. Its significance is further diminished given the current market's primary focus on tariff discussions and recent comments from President Trump.
While central bank independence aims for long-term goals despite short-term political shifts, it can also lead to unaccountable power that harms the economy and market confidence.
| category | event | key_takeaway |
|---|---|---|
| Federal Reserve Appointments | Trump's Provisional Fed Appointment | President Trump temporarily appointed Mr. Miran to a vacant Federal Reserve seat until January, preserving options for a permanent successor to Chairman Powell, with Mr. Waller being the most probable long-term candidate. |
| Central Bank Philosophy | Mr. Miran's Radical Views | Mr. Miran advocates for structural changes to the Federal Reserve, including shorter board terms and explicit accountability to the President, challenging the traditional concept of central bank independence. |
| International Trade Policy | US Ends 'Stacking' Tariffs on Japan | The US will cease its 'stacking' tariff policy on Japan and reduce rates, but collected additional tariffs will not be refunded, causing ongoing uncertainty. |
| Automotive Industry Impact | Challenges for Japanese Automakers | Lack of transparency in US trade policy and fluctuating tariffs inflict significant financial losses and hinder planning for Japanese auto companies, which are crucial to the national economy. |
| Monetary Policy Outlook | Fed Official Bostic's Remarks | Fed official Mr. Bostic highlighted the structural impact of tariffs and suggested one interest rate cut this year, emphasizing data-dependency for future monetary policy decisions. |
