Trump says he nominated Fed chair in hope of rate cuts
US President Donald Trump said that he nominated Kevin Warsh to head the US Federal Reserve due to the possibility of interest rate cuts.
In an interview with US broadcaster NBC News, Trump said that if Warsh wanted to raise interest rates, he would not recommend the former Federal Reserve chairman for this position.
Trump said he believed Warsh understood that he wanted looser monetary policy.
The president said there was “not much” doubt in his mind that the US Federal Reserve’s benchmark interest rates would be lowered.
Asked if Warsh understood that Trump wanted him to lower interest rates, Trump said, “I think so, but he still wants it.”
“So, if he came in and said, ‘I want to raise them’… he wouldn’t get the job. No,” Trump said in an interview on Wednesday, US time.
Trump had proposed Warsh as the successor to current US Federal Reserve chairman Jerome Powell.
The US Senate still must confirm Trump’s nominee for the future chairman of the Federal Reserve.
Powell’s term as the world’s top central banker will end in May.
Critics fear the central bank’s independence could be jeopardized if Warsh is at the helm.
Trump wants interest rates to be reduced because he finds the current interest rate between 3.5 and 3.75 percent too high, despite gradual reductions.
Contrary to Trump’s often simplified portrayal, the Fed chairman does not decide the interest rate alone.
Instead, the 12-member Federal Open Market Committee meets regularly and then votes on the future course of monetary policy.
The committee includes seven governors of the central bank as well as five regional bank presidents.
Among the five representatives of regional Federal Reserve banks, the president of the Federal Reserve Bank of New York is a permanent member; the other four rotate each year.
via Reuters
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