US President Donald Trump on Friday said that he would nominate Stephen Moore, an economic analyst and frequent critic of the Federal Reserve, to fill a vacancy on the Fed’s seven-member board.
Moore, a well-known and often polarizing figure in Washington political circles, served as an adviser to Trump during the 2016 presidential campaign. In that role, he helped draft Trump’s tax cut plan.
Trump has been harshly critical of the Fed’s rate increases even after the central bank announced this week that it foresees no hikes this year. Moore, formerly chief economist for the conservative Heritage Foundation, has also been critical of the policies of Fed Chairman Jerome Powell.
A fervent advocate of tax cuts, Moore is close to Larry Kudlow, head of the White House National Economic Council. The two collaborated in shaping the tax overhaul that Trump signed into law at the end of 2017.
Trump in his first two years in office has been able to reshape the central bank. He nominated four of the five current members. And he tapped Powell, who had been chosen for the Fed board by former president Barack Obama, to succeed Janet Yellen as chairman. If confirmed by the US Senate, Moore would fill one of two vacancies on the board.
Given his sharply partisan reputation, Moore could spark opposition among Democrats in the Senate, but Trump can score points with his core supporters — and with the majority Republicans in the Senate — by rejecting any assertions that Moore is too ideological for a Fed role that would make him a watchdog over the economy.
The selection of Moore marks a deviation from Trump’s previous selections for the board toward a visible public figure. In a March editorial in the Wall Street Journal, Moore estimated that Fed rate policies had reduced inflation-adjusted economic growth by as much as 1.5 percentage points in the past six months.
Moore proposed that the Fed set short-term rates with an eye toward stabilizing commodity prices, rather than solely on overall inflation.
This approach would have prevented the Fed from raising rates as much as it has, Moore has said.
This approach, if adopted, would help accelerate economic growth above 3 percent, compared with the longer-run average of 1.9 percent that Fed officials have forecast, he said.
With Trump as president, Moore became a sharp critic of Fed policies to shrink its balance sheet and return rates to what the central bank sees as a neutral level — neither stimulating nor hindering growth.
He said that Trump might consider trying to fire Powell for the rate hikes under his watch.
“What the law says, I believe, [Trump] can replace the Federal Reserve Chairman for cause,” Moore said during a radio interview in December last year. “And, you know, I would say, well, the cause is that he’s wrecking our economy.”
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