Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Trump's Fed pick, Shelton, calls for Fed coordination with White House

EconomySep 17, 2019 09:01AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

By Ann Saphir and Howard Schneider

WASHINGTON (Reuters) - Judy Shelton, U.S. President Donald Trump's pick to fill a vacant seat at the Federal Reserve, downplayed the independence of the central bank on Tuesday and called on the Fed to work more closely with the White House, an approach that would upend how it currently conducts monetary policy.

The Fed considers its policy independence a bedrock that ensures its ability to help the economy achieve full employment and stable prices, two mandates that Congress has assigned to it.

Trump has repeatedly attacked that independence, demanding that Fed Chair Jerome Powell slash interest rates to below zero to boost economic growth, further his administration's trade policies and help the U.S. compete better against other countries that already have negative rates.

While most mainstream economists see Trump's attempts to influence the Fed as risking the kind of runaway inflation that has plagued countries like Argentina where the central bank is not independent, Shelton has embraced his involvement.

The Fed, she wrote in an opinion piece published in the Wall Street Journal, should "pursue a more coordinated relationship with both Congress and the president," to attain goals, including a smaller trade deficit.

Congress, she wrote, "historically hasn’t sought to treat the Federal Reserve as a detached lever of economic power (but rather) intended to incorporate monetary policy into an overarching effort to achieve 'important national requirements' that improve U.S. economic prospects."

The column, one of several Shelton has penned since Trump said earlier this year he intended to nominate her, is a harbinger of a potential clash of cultures if she joins the Fed.

The framework she hints at, of close coordination between the Fed, the White House, and Congress, would break down the separation that Fed policymakers try to maintain between their judgments about the economy and the political priorities of a given administration.

Shelton did not respond to a request from Reuters about her column.

Introducing trade deficits to the Fed’s policy judgments could pose a particular challenge to other Fed goals.

Imports tend to keep inflation low, for example, and many economists argue that it is excessive government spending, not trade policy, that drives the shortfall between what the U.S. produces and what it consumes.

The balance between those two is made up through imports. If the Fed were to try to pare the trade deficit, that could make it harder to achieve its other goals of 2% inflation and full employment.

The Fed on Tuesday begins a two-day policy meeting where it is expected to cut interest rates by a quarter of a percentage point for the second time this year.

Trump's Fed pick, Shelton, calls for Fed coordination with White House
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (4)
Mike Roland
Mike Roland Sep 17, 2019 2:03PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
sounds like the new Russia is happening to the USA, first autocratic rule, only yes men around the chief smoke lower ( and I stress only men) FOX state run TV and a bunch of unwise followers... as I said new United states of russia
Mike Roland
Mike Roland Sep 17, 2019 2:03PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
forgot to mention that the head honcho goes gaga over dictators and thugs
Bade Sahib
Bade Sahib Sep 17, 2019 9:33AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Judy get some Courage
Bade Sahib
Bade Sahib Sep 17, 2019 9:32AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
What a wus Judy
Al Vlaj
alvlaj Sep 17, 2019 9:04AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Ugh. One step closer to the United States of Venezuela...
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email