Here’s a look at the candidates President Donald J. Trump is considering over the next few weeks to nominate as chairman of the Federal Reserve (the Fed) and where they stand on monetary policy.
Trump has met with Fed Chairman Janet Yellen, National Economic Council Director Gary Cohn, Fed Board Gov. Jerome Powell and former Gov. Kevin Warsh as he considers his choice to head the US central bank, three people familiar with the discussions said last week. Stanford University economist John Taylor is also on the list of recommendations put together by Trump’s advisers. There’s no clear front-runner and outlier candidates haven’t been ruled out.
Trump has said he expects to make a decision on the Fed-chair search this month. That’ll kick off a months-long process of Senate confirmation before Yellen’s current term expires in February.
Janet Yellen
Hawk or Dove? Yellen, 71, has had a track record of keeping rates low over her four-year term. She has consistently supported gradually tightening policy and gradually unwinding the balance sheet. Yellen has been a “super dove,” though “sprouting a few hawk feathers”, Amherst Pierpont Securities Chief Economist Stephen Stanley said.
Last month Yellen said it’s uncertain exactly why inflation has been running below the Fed’s 2-percent target—which it has mostly missed for the past five years. Weak inflation “strengthens the case for a gradual pace of adjustments” in rates.
Regulatory views: Yellen has defended stricter banking rules introduced after the 2007-2009 financial crisis. “Any adjustments to the regulatory framework should be modest,” she said in August.
Pros: Trump told the Wall Street Journal in July that he favors low rates, adding: Yellen has “historically been a low-interest-rate person”.
Cons: Yellen is a Democrat appointed by Barack Obama who’s led the regulatory policies the Trump administration is seeking to change. She’s an academic, while the administration has preferred installing business people into top positions.
Gary Cohn
Hawk or Dove? From the little we know, Cohn would likely be at least as dovish as Yellen. In 2015 when Cohn was still president of Goldman Sachs Group Inc., he questioned Yellen’s plan to hike rates, saying she had “no legitimate argument to raise rates without inflation being close to—or having some inkling that it’s approaching—2 percent”.
Cohn, 57, has criticized the Fed’s move toward transparency, arguing in a March 2016 speech that the central banks’ “very definitive forward guidance has gotten the markets very confused”.
Regulatory views: In February Cohn said rolling back regulations is a central priority for the White House. “We need to deregulate and cut down the regulatory process to grow jobs in this country.”
Pros: Cohn, who has helped lead the president’s drive on a tax overhaul, would seem to meet Trump’s twin goals of wanting low interest rates and pushing deregulation. Most Republican policy-makers are more hawkish, by contrast.
Cons: Cohn’s prospects have dimmed after he publicly criticized remarks the president made in the wake of racially charged violence in Charlottesville, Virginia. Cohn was at Goldman when the firm engaged in some of the era’s most controversial trades, and he helped manage the firm’s precrisis bet against the housing market. That background would be sure to be scrutinized in any congressional hearings.
Jerome Powell
Hawk or Dove? The Fed governor was rated as neutral on monetary policy by the Bloomberg Intelligence Fed Spectrometer. He’s never dissented on the Federal Open Market Committee since taking office in 2012. A survey of 30 economists in March found he was slightly more dovish than average Fed central bankers.