Economy

Trump considering dual nominations for Fed top spots

Trump considering dual nominations for Fed top spots”

President Donald Trump identified three candidates he may choose to run the Federal Reserve, as a report said he may name Jerome Powell and John Taylor together, although it's not clear who would be chairman and who would be vice chairman.

Trump said in a Fox Business interview that he is leaning toward appointing current Fed governor Jerome Powell to succeed Janet Yellen as chair of the central bank.

While there is no formal date set for when an announcement will be made on who will be sitting in the hot seat come 4 February, a White House spokesperson said on Wednesday that Trump will announce the next FED Chair in the coming days, with five candidates now in the running.

Second in the running, following yesterday's meeting with Trump, is current FED Chair Yellen with odds of 24%.

At the back of the pack is Trump's economic advisor Cohn, who has fallen well behind, with just a 7% chance of being selected and now considered an outsider.

Forgotten in the talk about the race for the Fed chair is that there is also a race for the Vice-Chair and someone in the top-5 will likely be offered the role.

As the decision comes down to the wire, President Trump may decide to reward two factions within the White House that are involved with the search process, one led by Treasury Secretary Steven Mnuchin, who prefers Powell, and the other by Vice President Mike Pence, who favors Taylor, according to those familiar with the matter.

Persistent low inflation has caught the Fed by surprise and is "of great concern", Yellen said. Once rates reach the lower bound, moreover, Taylor's rule-based approach would likely have to give way to judgment about what steps to take. Major stock indexes have kept climbing to record highs, a fact that President Trump cheers often. His appointment as chair would likely indicate a continuation of current Fed policies but without the political baggage of re-appointing Yellen.

Speaking late last night in Washington, Yellen said the federal funds rate, the key determinant of interest rates throughout the U.S. economy, is unlikely to rise back to its previous levels of more than four per cent.



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