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Trump picks close ally Stephen Moore for Fed seat as economy shows signs of weakness

  • U.S. President Donald Trump departs the White House en route to Florida, on Friday, March 22, 2019 in Washington, D.C. Trump's next Federal Reserve nominee will be Stephen Moore, he said. (Olivier Douliery/Abaca Press/TNS)



The Washington Post
Friday, March 22, 2019

WASHINGTON — President Donald Trump said Friday he’s picking his close ally Stephen Moore to fill an open seat on the Federal Reserve Board. Trump has repeatedly blamed the Fed for hurting the economy.

Moore was an adviser to Trump’s campaign and published a book Trumponomics: Inside the America First Plan to Revive Our Economy, heralding the president’s tax cuts and deregulation push.

Moore has told The Washington Post that he and the president have spoken about the Fed and that Moore felt Trump’s other nominees to the Fed board were too conventional and didn’t understand the president’s economic vision.

The White House plans to make a formal announcement that Moore is the nominee. Moore, who is a fellow at the conservative Heritage Foundation, would then go through a Senate confirmation process that can take months.

Moore is widely viewed as the most political nominee to the Fed board in years. He published a commentary in the Wall Street Journal last week with the title “The Fed Is A Threat To Growth.”

Past presidents have often nominated economists with doctorates and longtime bankers to the board who tended to be centrists. The Fed is supposed to be nonpolitical.

“When President Trump fumed that the Fed’s rate increases were smothering his growth policies, he wasn’t entirely wrong,” Moore wrote in the commentary. “The solution is obvious. The Fed should stabilize the value of the dollar.”

Trump has had an unprecedented chance to shape the Fed by having four of his Fed nominees confirmed, including chairman Jerome Powell. But Trump and Moore have been highly critical of Powell, especially after the sharp stock market sell-off at the end of December.

Trump has said numerous times that the economy and markets would be in better shape if the Fed had not raised interest rates four times last year, actions meant to keep the economy from overheating and get rates back to a more normal level as the nation recovered from the Great Recession.

“Frankly if we didn’t have somebody that would raise interest rates and do quantitative tightening, we would have been at over 4 instead of a 3.1,” Trump said in Fox Business interview Friday.

The president was implying that the pace of growth last year could have been over 4 percent without the Fed rate hikes. The official Commerce Department figure is 2.9 percent growth for last year, but an alternative measure of growth used by many economists is that the economy expanded by 3.1 percent in 2018.

The Fed dramatically changed direction this year as growth in China and Europe weakened and the government partially shut down. On Wednesday, the vast majority of Fed leaders indicated they don’t foresee any rate hikes this year. It was a big change from December when many Fed leaders anticipated two more hikes in 2019.

There are two open seats left on the Fed’s seven-member board. If confirmed, Moore would fill one of them.