Packing the Fed with Trump allies

Mae Love
April 14, 2019

"Does that mean meddling in the decisions of the Fed?"

Still, the Fed is anxious about the economy overheating and says small, gradual interest rate increases are the best way to tap the brakes a bit to ensure inflation doesn't rise too quickly and bubbles don't form.

Senate Majority Leader Mitch McConnell declined to say Thursday whether he thinks his chamber would confirm Herman Cain to join the Federal Reserve board, casting doubt on the former Republican presidential candidate's prospects should President Donald Trump advance him for the post. President Trump had announced his plan to nominate Cain, but that decision was met with criticism that the nomination was politically motivated due to Cain's support of Trump's 2016 presidential campaign and administration. Trump's trade war with China is likely playing a role in worsening the slowdown that was already underway overseas. "Growth does not cause inflation", he said. Trump himself has taken a nontraditional approach to the Fed, repeatedly accusing it of mismanaging the economy by not pushing hard enough for low interest rates.

The president nominates members to the Fed's seven-member board of governors and Trump elevated Powell to chairman a year ago.

Some Senate Republicans have voiced concerns over Cain's support for slashing interest rates, echoing a call by Trump.

"When Powell was first appointed, he might have gotten a chilly reception from our caucus" because he was elevated to Fed chair by Trump, Sherman said.

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Controversy over Cain's possible nomination, as well as that of economic commentator and Trump supporter Stephen Moore, continued on Thursday.

Central bank independence from short-term politics is seen as important to prevent influence that could lead to runaway debt and hyperinflation.

Trump has slammed the central bank's rate hikes in 2018 as thwarting economic growth and has publicly pressed policymakers to change course. Another 12 members of the Federal Open Market Committee, which sets interest rates, head regional banks and are chosen by local boards of directors, not the president. "He's not a political person in any way", she said.

"Well, I like Herman Cain and Herman will make that determination", he said.

"Yeah", said Moore in 2016.

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