Race for Fed chair a tangle of interests

WASHINGTON: President Donald Trump says he is “very, very close” to naming the next Federal Reserve chief, building suspense toward perhaps the most consequential decision he has left to make in 2017.

But the sweepstakes to pick the new Fed chair, likely to be decided before Trump departs for Asia in pulled in different directions.

Stick with the current chair, an Obama appointee who has kept rates low and markets happy? Or switch to a Republican more favorable to the Trump administration’s deregulation agenda?

For most presidents, giving Janet Yellen another four- year term would be the obvious move: is low and, despite whipsawing hurricanes, the economy is growing. By any measure, Yellen has performed exceedingly well.

Furthermore, for the past 40 years or so, Fed chairs have been passed like batons between presidents, with the newest White House occupant reappointing the occupant of the powerful post inherited from his predecessor, if only for the sake of continuity and calm markets.

Trump has said he likes Yellen and interviewed her as a candidate. And in the post-crisis decade of easy money, Yellen has shown she will not rush to raise interest rates -- something every president should like.

Changing horses midstream?

“If he’s going to make a change, we don’t favor it,” Art Hogan of Wunderlich Securities told AFP.

“She’s certainly been a great communicator to markets.”

Still, betting markets currently expect Trump to pass over Yellen not to retain the incumbent Fed chair since Jimmy Carter dumped Arthur Burns in favor of G. William - eted in 1978.

This would mean changing horses midstream, even though the economy is the one area of smooth sailing for an administration otherwise engulfed in turmoil. Why? For starters, Yellen is both a Democrat and an Obama appointee, making her an enticing target for a president who has seemingly relished in dismantling his predecessor’s major decisions and policies.

Yellen is also a vocal defender - ing regulation put in place after the 2008 meltdown -- a position that runs counter to the Trump administration’s agenda of fullbore deregulation.

Lastly, she is a favored target of Republican lawmakers that Trump may need to govern and who believe interest rates should be higher but regulations reduced.

“Making a change may be seen as playing to his base, who think the Fed has stayed too low for too long,” said Hogan.

At a meeting with Senate Republicans on Tuesday, according to Bloomberg, Trump asked for a show of hands and one participant said most appeared to favor Stanford University economist

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