Howard Schneider
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By Howard Schneider
WASHINGTON (Reuters) -Any move by U.S. President Donald Trump to name a replacement for Federal Reserve Chair Jerome Powell would have no influence on monetary policy while the nominee awaited confirmation, Chicago Fed President Austan Goolsbee said on Thursday.
"That would have no effect," Goolsbee told CNBC's "Squawk Box" program, referring to the possibility Trump may name an early nominee to replace the current U.S. central bank chief when his term ends in 11 months in hopes of influencing interest rates in the meantime. "We have a chair of the (Federal Open Market Committee) ... That's Jay Powell. What somebody who is not the chair thinks about monetary policy - they can have whatever opinion they want. We have to go every six weeks and have votes."
Trump has become increasingly pointed in calling for the Fed to cut rates, even as most of its policymakers feel the central bank is sidelined until the administration makes final decisions on what level of tariffs it plans to impose, and they can study the impact of those rising import taxes on inflation.
In hearings before Congress this week, Powell reiterated that the Fed is prepared to cut rates if the tariffs have no effect on inflation, but that economists broadly anticipate the steep levies imposed so far and still in the offing will raise prices over the course of the year.
The effect on inflation "could be large or small. It is just something you want to approach carefully. If we make a mistake people will pay the cost for a long time," Powell said.
Since the Fed held rates steady at its meeting last week, several central bank officials have said they agree it is best to wait on rate cuts; Fed Vice Chair for Supervision Michelle Bowman and Fed Governor Christopher Waller, both Trump appointees, have said rates could be cut as soon as the July 29-30 meeting, given recent moderate inflation readings.
Waller was mentioned in a recent Wall Street Journal article as a possible replacement for Powell, with the added benefit to Trump that he already has a vote on policy and relationships among his colleagues built since joining the Fed's Board of Governors in January 2020.
Other possible nominees mentioned by the media include former Fed Governor Kevin Warsh, who has close ties to the Trump organization and was almost named central bank chief in the president's first term in the White House, as well as Kevin Hassett, who is the director of the White House's National Economic Council, and Treasury Secretary Scott Bessent.
