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President Trump is expected to announce his nomination for the next Fed chair any day, and his eventual pick is unlikely to significantly alter the Fed’s existing policy path, BofA Securities senior US economist Stephen Juneau said.
“They’re probably all supportive of cutting rates more than maybe the current Fed led by Powell is, and cutting rates relatively quickly to, say, a 3% level,” Juneau said of the leading candidates for the job.
Fed Governor Kevin Warsh, Fed Governor Chris Waller, and BlackRock’s Rick Rieder are seen as the frontrunners for the Fed chair position. National Economic Council director Kevin Hassett is also in the running, though his odds have diminished after President Trump said he’d like to keep Hassett in his current role.
All four candidates have expressed that they’d support further rate cuts, he continued. “So … in terms of the general dynamic, it doesn’t change all that much in terms of direction of policy.”
Trump selected Jerome Powell to lead the Federal Reserve in 2017, but the president has increasingly criticized Powell for not slashing interest rates by as much as he would like. Powell’s term expires in May.
Juneau also stressed that the Fed chair has just one vote and does not set policy alone.
“The composition of the Fed may not change all that much other than getting a new Fed chair, so it’s really going to depend on what the committee’s read of the economic conditions is, and how do you get a majority view in terms of setting policy rates,” Juneau said. “That’s really going to always come down to economic fundamentals, economic activity, inflation, the labor market.”