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Who will be the next Fed’s new chairman?

Federal Reserve, Fed, Fed's chair

Federal Reserve, Fed, Fed's chairPresident Donald Trump has so far talked with Federal Reserve Chair Janet Yellen, National Economic Council Director Gary Cohn, Fed board governor Jerome Powell and former governor Kevin Warsh as he considers who to nominate to head the U.S. central bank, three people familiar with the discussions said.

Trump and Treasury Secretary Steven Mnuchin interviewed Powell on Wednesday, according to a White House official, and Warsh on Thursday, according to two administration officials. Trump has had discussions with Cohn about the job, and has also met with Yellen, one of the people familiar with the discussions said. Meetings with additional candidates are in the works, another of the people said.

“I’ve had four meetings with Fed chairman, and I’ll be making a decision over the next two or three weeks,” Trump told reporters before boarding the presidential helicopter at the White House. He’s travelling to his golf club in Bedminster, New Jersey for the weekend.

Yellen’s term expires in February. Financial stocks rose and bonds fell on the report of Warsh’s meeting.

Warsh, 47, currently is a fellow at the Hoover Institution. Others Trump is said to be considering for Fed chair include Stanford economist John Taylor, former BB&T Corp. CEO John Allison and Columbia University economist Glenn Hubbard.

Powell, 64, is the only Republican currently on the Board of Governors. He has a solid reputation among lawmakers from both parties and has ably led the Fed’s regulatory efforts, albeit on a temporary basis, since Daniel Tarullo retired in April. Before joining the Fed, Powell spent eight years at private equity firm Carlyle Group.

The Fed declined to comment.

Cohn and Yellen, whose Fed leadership Trump has complemented, remain potential candidates and the president’s advisers are trying to assure that he has a range of options, one official said. The selection is one of the most important before Trump, with the central bank responsible for safeguarding the U.S. economy and looked to as a source of global financial stability.

“In terms of policy, I think it is fair to say that Warsh is less dovish than Yellen,” said Stephen Stanley, chief economist at Amherst Pierpont Securities in New York. “He would be less in favour of fine tuning and more sympathetic to the Fed’s role simply being to operate quietly in the background and let the private sector drive things forward.”

The Wall Street Journal reported the interviews of Warsh and Powell earlier.

As a Fed governor from 2006 to 2011, Warsh drew on Wall Street experience at Morgan Stanley to play a key behind-the-scenes role in efforts to quell the financial crisis. He’s been a vocal critic of the Fed’s monetary stimulus policies since the crisis, arguing the approach hasn’t been effective and may have dangerous side effects.

(Source: Bloomberg)

 

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