Stephen Miran was confirmed by the Senate with a close vote of 48-47. He will take the place of Adriana Kugler on the Federal Reserve Board. Miran is notable for being the first executive-branch official to join the central bank’s board since 1935. He will be present at the Federal Open Market Committee (FOMC) meeting on September 16-17.

Pending Term of Service

Miran’s term will run until January, after which he is expected to return as chairman of Trump’s Council of Economic Advisers. Lisa Cook will also attend the same FOMC meeting. Miran’s confirmation signals a significant change. He is likely to advocate for lower interest rates, introducing a political dimension to the FOMC meeting starting today, September 16, 2025. This could challenge the Fed’s usual independence from the White House and bring new uncertainties. There has already been a noticeable impact in the derivatives market. Overnight pricing from CME’s FedWatch Tool shows that the likelihood of a rate cut in November has risen from 35% to nearly 60%. This comes after the Consumer Price Index report for August 2025 indicated that core inflation remains stubbornly above the Fed’s 2% target, sitting at 3.1%.

Market Reactions and Predictions

Traders should prepare for the possibility of lower rates in the upcoming weeks. We are noticing more buying of December SOFR futures, which is driving down implied yields, as well as increased long positions in 2-year Treasury note futures. Purchasing call options on bond futures like the ZN could provide a lower-risk strategy to benefit from this anticipated dovish shift. This political influence on the Fed is also likely to boost equities, leading us to expect gains in S&P 500 futures. However, breaking from tradition may cause short-term volatility and raise questions about the Fed’s credibility. Thus, considering VIX call options that expire in October could be a wise way to hedge against any unexpected developments from the FOMC statement tomorrow. A more politically influenced, dovish Fed will almost certainly weaken the U.S. dollar. We predict that traders will start building short positions in Dollar Index futures, anticipating a drop below the 102 level that it has maintained this quarter. This situation seems similar to the early 1970s when political pressure resulted in an accommodating monetary policy that eventually led to uncontrolled inflation. Create your live VT Markets account and start trading now.

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