(Bloomberg) — Donald Trump’s picks to join the Federal Reserve won’t have big a political influence on monetary policy, according to Cleveland Fed President Loretta Mester.
“I have no reason to believe that the two prospective nominees are going to make it more political or less political — the Fed works in an apolitical manner,” Mester said in an interview with Bloomberg Television’s Tom Keene and Francine Lacqua. “But certainly we don’t want to have short-run political factors influencing monetary policy.”
Trump announced his choices on Tuesday for the Federal Reserve’s board, and both are likely to support his calls for lower interest rates. They are Christopher Waller, a more established choice drawn from within the Fed’s own ranks, and Judy Shelton, who has spent decades outside mainstream economics and has faced criticism for her unconventional views on monetary policy.
Mester laid out the argument against an immediate rate cut, while many of her colleagues are leaning toward loosening policy and investors assume it’s on the way. She said she would need to see more evidence of a significant slowdown before voting for a cut.
Asked about Christine Lagarde’s nomination to lead the European Central Bank, Mester said that “she’s going to do a fine job. She has good staff at the ECB to help her as needed.”
Lagarde has a strong legal background similar to Fed Chair Jay Powell.
“One of the things at the Federal Reserve that I think is strong is that we have different backgrounds and diverse views around that table,” Mester said. “That makes for a better policy-making environment. So it’s the same thing in Europe, I would say.”
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