After a turbulent 2025, next year could see the Federal Reserve become even more of a political battleground as the Trump administration tries to fill the seven-strong board of governors with more of its own nominees.
At the moment, a minority of three members of the Fed board — Christopher Waller, Michelle Bowman and Stephen Miran — are appointees of Donald Trump. Miran’s seat expires in January and is likely to go to whoever the US president nominates to replace Jay Powell as Fed chair.
But other possibilities could soon emerge.
In January, the Supreme Court is set to hear Fed governor Lisa Cook’s case against Trump’s attempt to fire her over allegations of mortgage fraud.
If Cook, who has denied the charges, loses her fight to remain at the US central bank, it would tip the balance in favour of Trump appointees. Depending on the timing of the judgment, a decision against Cook could also raise the prospect of the board blocking the reappointment of regional Fed presidents that was due in February 2026.
An important decision looms for Fed chair Jay Powell, too. Usually, Powell would be expected to leave the Fed board when his term ends in May. But he could, in theory, remain as a governor until January 2028.
Such a move would be highly unusual, but Powell may wish to remain at the Fed rather than give Trump appointees the chance to secure a strong majority on the board.