President Donald Trump plans to nominate Judy Shelton and Christopher Waller to join the Federal Reserve, the White House said.
The president, who has publicly criticized Fed Chairman Jerome Powell and his colleagues for not cutting interest rates as aggressively as he would like, tapped the pair in July for the two remaining vacancies on the central bank’s seven-seat board in Washington. But the formal announcement of his intention to nominate them didn’t come until Thursday and will now move to the Senate for consideration.
If confirmed by the Senate, they will join an institution that’s been under constant attack from the president who has sought to make Powell a potential scapegoat if the economy falters as he seeks re-election this year. Trump returned to this theme at the White House on Wednesday, appearing to lament that he had passed over Kevin Warsh in picking Powell as Fed chief.
Fed officials cut interest rates three times in 2019 but signaled they expect to keep rates on hold through 2020, based on their forecast of moderate economic growth with unemployment staying near a 50-year low.
The two economists have widely different backgrounds, but their policy comments suggest they’d be inclined to be open to Trump’s calls for easier monetary policy.
Shelton, who has been an informal adviser to Trump, has publicly said the central bank should reduce rates. She’s spent decades outside mainstream economics and recently appears to have completed a metamorphosis from proponent of returning to the gold standard — a concept broadly espoused by those who feel monetary policy is too lax — to an advocate of the need for more stimulus.
“There is a little more at stake here than just filling up the governor spots,” said Sarah Binder, a senior fellow at the Brookings Institution and co-author of a book on the Fed’s relations with Congress. “She could get confirmed, but it does seem that the deck is stacked against the easy road here.”
Binder noted that senators may find it difficult to square Shelton’s stand on stable money and the gold standard with her newfound desire to advance the policies of Donald Trump. She could also be in line for the chairmanship if Trump wins a second term. Shelton has a doctorate in business administration from the University of Utah with an emphasis on finance and international economics.
Waller is largely a conventional choice because he’s drawn from within the Fed’s own ranks.
He is a Ph.D. economist who previously served as a professor of economics at the University of Notre Dame before joining the St. Louis Fed in 2009, where he is director of research. Waller has been consistent in his calls for a more dovish approach over the years. His key research focus has been on monetary and macroeconomic theory and the political economy.
The lengthy Senate confirmation process means neither candidate is likely to join the board for months. Current Vice Chairman Richard Clarida’s nomination was announced April 18, 2018, and he wasn’t sworn in until Sept. 17. Governor Michelle Bowman, nominated the same day as Clarida, didn’t take office until Nov. 26.
As a high-ranking Fed staffer, Waller may have a better chance of passing muster with lawmakers than some of Trump’s previous contenders. As for Shelton, the Senate has already confirmed her in her current role as the U.S. executive director for the European Bank for Reconstruction and Development.
In an interview with Bloomberg in May, she said she was “highly skeptical” that the goals for the Fed set by Congress — the pursuit of maximum employment, stable prices and moderate long-term interest rates — were relevant.