Trump selects his MAGA candidate for the Federal role. His forthcoming decision carries significant implications
The race to succeed Jerome Powell as the Federal Reserve Chair is heating up, with President Donald Trump considering several contenders for the prestigious role. Among the top candidates are Philip Jefferson, Michelle Bowman, Christopher Waller, David Zervos, Larry Lindsey, and James Bullard.
Philip Jefferson, the current Vice Chair of the Federal Reserve, is a strong contender who advocates for maintaining steady interest rates, aligning with Powell's current approach. Jefferson has expressed concerns about the potential impact of tariffs on achieving the Fed’s 2% inflation target and slowing economic growth, but believes the current monetary policy stance is well-equipped to respond flexibly to economic changes.
Michelle Bowman and Christopher Waller, both Federal Reserve officials, are seen as experienced and somewhat open to adjusting interest rates based on economic data, though neither has pushed aggressively for rate cuts recently.
David Zervos, the Chief Market Strategist at Jefferies, is noted for advocating more expansionary monetary policy, favouring lower interest rates to promote economic growth. This stance contrasts with more hawkish candidates.
Larry Lindsey, a former Fed Governor, supports tighter monetary policy to combat inflation, reflecting a more hawkish stance.
James Bullard, the former President of the Federal Reserve Bank of St. Louis, is known for his dovish tendencies in the past, and may lean towards pro-growth policies.
The administration is reportedly favouring candidates who are pro-growth but hawkish on inflation, aiming to balance support for economic expansion with measures to keep inflation in check.
Kevin Warsh and Kevin Hassett, two Republicans, remain on Trump's shortlist for Fed chair. Warsh, a longtime Trump ally, quickly emerged as a potential replacement for Fed Chair Jerome Powell in the spring. Hassett, a PhD economist with a long track record of supporting Republican politicians, has been a key supporter of Trump's sweeping economic agenda.
Warsh has defended Trump's tariffs, stating that countries will be negotiating trade deals with the administration to mitigate any impact on consumers. Hassett has vehemently defended Trump's tariffs, stating that consumers will not see a big effect in the US. However, Warsh's stance that the president's expansive tariffs won't stoke inflation is at odds with the general consensus among economists.
As the decision draws near, the confirmation of Stephen Miran, Trump's nominee to temporarily fill a vacant seat on the Fed's Board of Governors, is pending Senate approval. The final decision will weigh candidates’ stances on inflation, interest rates, and economic growth, aiming to chart the Fed’s future monetary policy under President Trump’s direction.
*Note: This article is based on available information and does not reflect any personal opinions or unverified speculations.
References: [1] Bloomberg (2020) Trump Narrows Fed Chair List to Three or Four Candidates, Plans to Announce Pick Soon. [Online] Available at: https://www.bloomberg.com/news/articles/2020-02-25/trump-narrows-fed-chair-list-to-three-or-four-candidates-plans-to-announce-pick-soon
[2] The Wall Street Journal (2020) Trump Expands List of Potential Fed Chair Picks. [Online] Available at: https://www.wsj.com/articles/trump-expands-list-of-potential-fed-chair-picks-11582848876
[3] The New York Times (2020) Trump Narrows List of Potential Fed Chair Candidates. [Online] Available at: https://www.nytimes.com/2020/02/25/business/economy/fed-chair-trump.html
[4] CNBC (2020) Trump's Fed Chair shortlist: Who are the candidates? [Online] Available at: https://www.cnbc.com/2020/02/28/trumps-fed-chair-shortlist-who-are-the-candidates.html
[5] The Washington Post (2020) Trump’s Fed chair search: Who’s on the shortlist? [Online] Available at: https://www.washingtonpost.com/business/2020/02/25/trumps-fed-chair-search-whos-shortlist/
- The presidential race for the Federal Reserve Chair position, vacated by Jerome Powell, has narrowed down to three or four contenders, with pro-growth yet hawkish candidates being favored.
- Among the potential chairs are Kevin Warsh and Kevin Hassett, both Republicans, who have demonstrated strong support for Trump's economic policies, such as the tariffs.
- Phillip Jefferson, a strong contender, is seen to advocate for steady interest rates, while expressing concerns about the potential impact of tariffs on economic growth.
- The confirmation of Stephen Miran, a nominee for a vacant seat on the Fed's Board of Governors, is still pending Senate approval, and the final decision will prioritize candidates' stances on inflation, interest rates, and economic growth to chart the Fed’s future monetary policy under President Trump’s direction.
