By Steve Holland
WASHINGTON (Reuters) - U.S. President Donald Trump met with former Federal Reserve Governor Kevin Warsh at the White House to discuss his potential nomination as Fed chair, a source with knowledge of the meeting said.
Warsh, who was a Fed governor between 2006 and 2011 and resigned from the board due to disagreements over the central bank's bond-buying program, has long been regarded as one of the front-runners to succeed current Chair Janet Yellen.
News of the meeting between Trump, Warsh and Treasury Secretary Steve Mnuchin was first reported by the Wall Street Journal. There was no indication that an appointment was imminent and other candidates, including Yellen, remain in the running.
The White House confirmed the meeting took place on Tuesday, but declined to comment on what was discussed.
Treasury yields spurted higher on news of the Trump meeting with Warsh, who is viewed as more of a hawk than Yellen.
Yellen has led the central bank through its first rate hikes since the global financial crisis, ended the Fed's bond buying program and most recently set in process a reduction in the trillions of dollars in the bank's bond holdings.
Her term as chair expires in February.
"He’s definitely more hawkish on the spectrum. He is quite a contrast to Yellen. It does seem he is the front-runner even though it’s not a sure thing he will be nominated,” Gennadiy Goldberg, interest rates strategist at TD Securities in New York, said of Warsh.
As recently as July, Trump had not ruled out reappointing Yellen, telling the Wall Street Journal that he liked her demeanor and desire to keep interest rates low.
In addition to Warsh, officials have said Trump and his advisers have also discussed Stanford University economist John Taylor, former BB&T (NYSE:BBT) Bank Chief Executive John Allison, and former Fed Governor Lawrence Lindsey as possible appointees to the Fed’s Board of Governors. The Fed chair heads up the board.
There has also been speculation that Trump could turn to his top economic aide, Gary Cohn, for the Fed chair position.