Judy Shelton and Christopher Waller were officially nominated for seats on the Federal Reserve Board of Governors on Thursday.
President Trump first said he planned to nominate the pair in July. Waller is an economist with the Federal Reserve Bank of St. Louis and Shelton served as U.S. executive director at the European Bank for Reconstruction and Development.
Shelton has offered some controversial views, including advocating a return to the gold standard, as well as backing lower interest rates.
“There are nuances to evaluating President Trump's Fed nominees,” according to Allen Sukholitsky, chief macro strategist at Xallarap Advisory. He looked at their “policy views, financial experience, and confirmation probability.”
While Shelton earns points “for her willingness to critically analyze the Fed's monetary policy approach,” Sukholitsky noted, “her views have wavered over the years.”
Waller has more financial experience, having worked for “the St. Louis Fed for more than a decade,” while “Shelton has spent her career inside think tanks.”
Waller is more likely to be confirmed, he said, “because it is almost impossible to find a public figure supportive of Shelton's nomination, let alone her confirmation.”
“After the White House earlier floated the notion of nominating Herman Cain and Stephen Moore for the Federal Reserve Board, it might be said that the names of Christopher Waller and Judy Shelton (slightly less so) seem like more conventional candidates,” said Mark Hamrick, senior economic analyst at Bankrate.com.
“The president has been remarkably aggressive in his campaign for lower interest rates, at times seeming downright hostile toward the historical notion of separating the political interests of the administration from the central bank's mandate,” he continued. “Ironically, of course, the president's desire for lower rates was mirrored in action to a degree with the three rate cuts seen in 2019, even though it was more coincidental than a direct result of his lobbying.”
And, he noted, the Fed needs a full complement of members, something it has not had for a while. “Once appointed, whomever is sitting around the large board room table at the Fed, the group will almost certainly ignore the tone of any tweets or helicopter-side question-and-answer sessions granted by the president on the question of monetary policy,” he said. “Members of the Federal Open Market Committee know that to cater to political whims runs counter to the tradition of political independence necessary for them to do fulfill their mandate serving the American people.”
“Chris Waller is solid with a lot of Fed experience,” said Mickey Levy, Berenberg Capital Markets' chief economist for the U.S. Americas and Asia. “I am not familiar with Judy Shelton or her research.”
Besides “a thorough understanding of monetary policy and the economy,” Levy said Waller offers “an additional benefit: as a director of research at the St Louis Fed and an attendee of every FOMC meeting since 2013, he understands the Fed and is a known commodity within the Fed. This would accelerate his role in contributing to the Fed’s debate on monetary, banking and regulatory issues and decision making.”
