Just tomorrow! Trump's plan to reshape the Federal Reserve enters a critical stage

The movement to reshape the Federal Reserve by U.S. President Trump will make progress on Thursday, when the Senate will hold an accelerated confirmation hearing for his nomination of a close adviser as a Fed governor.

The Senate Banking Committee's review of Milan's appointment will, for the first time, provide an in-depth look at how prominent Republican senators will balance their long-standing support for an independent central bank with their loyalty to their party leader. Trump has publicly vowed to soon secure a majority on the Fed and lower interest rates.

So far, no Republican senator has indicated they would risk breaking with Trump to oppose this nomination.

Privately, Democrats admit that the committee's timetable may not allow them to delay the confirmation vote long enough to prevent Milan from participating in a key monetary policy meeting in mid-September, where the Fed is widely expected to cut rates for the first time since last December.

The group's debate over Milan comes as Trump is attempting to fire Fed Governor Cook. Trump nominated Milan to fill the Fed governor seat vacated by Kugler's early departure.

Last week, Cook filed a lawsuit seeking a court ruling to block Trump.

Trump's move against Cook and his broader attempts to influence the Fed have angered Democrats like Elizabeth Warren, who called it an "authoritarian power grab."

In a letter released last week, Warren and other Democrats on the committee argued that the group should not advance any of Trump's Fed nominees unless he abandons what they called "an unprecedented attempt to undermine its independence."

However, they need the help of Republicans on the committee, some of whom have previously objected to Trump's repeated attacks on Fed Chair Powell.

John Kennedy, a Republican senator from Louisiana, has praised Powell for lowering inflation without causing a recession, and cited Turkey's inflation as a warning of what happens when monetary policy is controlled by politicians.

Kennedy said, "I plan to ask the nominee about his views on the Fed's independence, and whether he thinks this is a good or bad thing."

Mike Rounds of South Dakota said before meeting with Milan on Tuesday evening that he looked forward to supporting Milan, but wanted to ensure Milan understood the importance of Fed independence for confidence in the dollar and U.S. Treasuries. He said, "People must have confidence in the Treasury and bond markets."

Another committee member, Thom Tillis of North Carolina, is also not seeking radical reforms of the Fed, and, since he is not running for re-election, has some "political freedom."

Earlier this year, Milan was appointed as a current White House official with unanimous Republican support, by a vote of 53 to 46. Given Trump's overwhelming support among the Republican base, it would take four Republican defections to block Milan's appointment to the Fed.

Milan has dismissed concerns from some Fed policymakers that Trump administration tariffs could reignite inflation, and has called for lower interest rates, in line with Trump's wishes.

In a 2024 paper, he also proposed more radical reforms that would undermine the Fed's independence. These include shortening governors' terms, stipulating that they serve "at the pleasure of the U.S. president," and placing the central bank under congressional appropriations.

Trump has considered appointing Milan to a long-term board seat, especially if the courts approve the dismissal of Cook, whose seat runs until 2038.

After Milan fills the short-term vacancy, the next term for Kugler's seat will last another 14 years.

The battle over Milan's nomination also comes as Republican leaders are more broadly pushing to accelerate Trump's nominees this month. Senate Republican Whip John Barrasso is pushing to change the rules to bypass Democrats' large-scale delays of nominees.

Even without changing the rules, Democrats can only delay the process for a few days after the hearing.