Trump favors economists for Fed vacancies
Pair who favor lower interest rates are said to get nomination
WASHINGTON — President Donald Trump plans to nominate Judy Shelton and Christopher Waller to fill the two remaining seats on the Federal Reserve Board of governors, the latest push in Trump’s effort to get the central bank to lower interest rates ahead of the 2020 election.
Shelton is a conservative scholar and former adviser to the Trump campaign who told The Washington Post last month that she thinks interest rates should be cut “as fast as possible.”
Waller is an economist who serves as research director at the Federal Reserve Bank of St. Louis. He rarely speaks publicly, but his boss, St. Louis Fed President James Bullard, was the only member of the Fed’s policy setting committee to vote for an interest-rate cut in June.
Trump has lashed out at the Fed for months, claiming the central bank is harming the economy ahead of the 2020 election by keeping interest rates high. Fed leaders have ignored Trump, saying they are doing what is best for the country by raising rates last year and holding them steady so far this year.
Trump’s last four nominees for the Fed board failed to get through the Senate confirmation process as Republicans broke ranks with Trump to kill the nominations.
“I am pleased to announce that it is my intention to nominate Christopher Waller, PhD, Executive VP and Director of Research, Federal Reserve Bank of St. Louis, Missouri, to be on the board of the Federal Reserve,” Trump tweeted Tuesday, adding in another tweet that he also plans to nominate Shelton.
Trump appointed Shelton U.S. executive director of the European Bank for Reconstruction and Development early in his tenure, a position that required Senate confirmation. Shelton’s Fed nomination could potentially move faster since she has been vetted before. She holds a doctorate in business administration from the University of Utah and was a fellow for many years at Stanford’s Hoover Institution.
She has been a strong proponent of returning the United States to the gold standard, which the nation abandoned years ago and many economists think would be a mistake to bring back. During the crisis, she criticized the Fed for cutting interest rates to zero and doing so much to stimulate the economy, but now she is in favor of lower rates.
“I would lower rates as fast, as efficiently, as expeditiously as possible,” Shelton said last month. “The goal is still job creation even though it’s low employment.”
Waller earned his doctorate in economics from Washington State University and is considered a more typical candidate for a Fed job given his many years as an economics professor and researcher at the central bank. A spokeswoman for the St. Louis Fed said the White House approached Waller about the role in June and Waller met with the president Tuesday.
“Waller seems like he’s a perfectly fine candidate. I don’t see anything glaringly wrong with him,” said Tim Duy, a University of Oregon professor and author of the “Fed Watch” blog. “Judy Shelton is more complex. She was adamantly against interest rates at zero during the recession a decade ago and now she’s for low rates like Trump.”
Interest rates are low by historical standards, but they are at the highest level since the financial crisis. Fed leaders argue the economy is healthy and does not need extra stimulus from ultra low interest rates, but Trump blames the Fed for any problems in the economy or markets.
The Fed is expected to cut rates in July or September to counterbalance the harm from Trump’s trade war, which has sent investment down. But Trump is likely to want even lower rates.
Trump appointed four of the five Fed governors, including Chair Jerome Powell, but the president has looked into demoting Powell, a move that would likely cause an uproar in the financial markets.
Business leaders and investors generally believe the Fed must be independent from politics to make the best decisions for the long-term health of the economy.