[WASHINGTON] US President Donald Trump said on Wednesday the next chairman of the US Federal Reserve will be someone who believes in lower interest rates “by a lot.”
“I’ll soon announce our next chairman of the Federal Reserve, someone who believes in lower interest rates, by a lot, and mortgage payments will be coming down even further,” Trump said.
Trump made the comments during a national address touting his economic and national security accomplishments in the first year of his second term in office.
He has previously indicated that he will announce his chosen successor to current Fed Chair Jerome Powell early next year.
All of the known finalists – White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh and current Fed Governor Chris Waller – advocate for interest rates to be lower than they are now.
None, however, has expressly indicated they would push the US central bank to slash rates as low as Trump has demanded, in some cases to as low as a crisis-level 1 per cent.
The current Fed rate ranges from 3.5 per cent to 3.75 per cent, and not even his latest appointee – Governor Stephen Miran – advocates for a rate anywhere near that low.
Trump has repeatedly expressed a desire for lower mortgage rates, but the interest rate the Fed controls has only limited effect on longer-term borrowing costs. Those are more typically influenced by longer-term rates the Fed has less sway over, such as the 10-year Treasury note yield.
That rate is moved by investors’ expectations for US economic growth and inflation and on balance has changed little in the last year. Mortgage rates have been stuck in the 6.3 to 6.4 per cent range since Labor Day and show little indication of moving lower.
Trump told the Wall Street Journal last week that he was leaning toward either Warsh or Hassett as the next head of the US central bank.
All the same, interviews continued on Wednesday with a meeting with Waller, one of the early advocates among current Fed policymakers for lower rates but a stalwart defender of Fed independence.
Trump told the newspaper that he thought the next Fed chair should consult with him on where to set interest rates. Presidents typically leave rate decision-making up to the Fed.
“Typically, that’s not done anymore. It used to be done routinely. It should be done,” Trump said. “It doesn’t mean – I don’t think he should do exactly what we say. But certainly we’re – I’m a smart voice and should be listened to.” REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
