US President Donald Trump writes on Truth Social that he has known Kevin Warsh for a long time and has no doubts that he would make a good central bank manager, writing that he may be “the best.”
He was already on the favorites list last time, but Powell got the job instead, and Donald Trump is said to have regretted it later, says Elisabet Kopelman, US economist at SEB.
– After being interviewed by Trump, he has been in favor of lower interest rates, and it is very likely that he would also be more inclined to cut interest rates at the margin, but he is still by no means extreme, says Elisabet Kopelman.
The market had previously expected Kevin Warsh to be nominated. The dollar has strengthened and gold prices have fallen, according to the data.
“I still think it’s an election that the market wouldn’t be too worried about, but that Trump would then choose someone who is seen as a little more conventional,” Kopelman says.
Elisabet Kopelman emphasizes that he was critical of the central bank after leaving the Fed.
He criticized The Fed waited too long to respond to high inflation, but he also thought the Fed had become a little too political.
Before Trump’s nomination, the market was concerned that the president’s repeated and harsh verbal attacks on Fed Chairman Jerome Powell, including threats of criminal prosecution, would damage long-term confidence in the central bank.
On Thursday, Trump called Powell an “idiot” who was destroying America’s economic prospects. Trump’s criticism last year was largely that he believed the Fed should have cut interest rates more to boost lending and growth in the United States. Jerome Powell’s term expires in May.
Prices of precious metals, which have risen sharply since the turn of the year, fell on Friday morning as information about Warsh’s nomination leaked to the American media. The price of gold, for example, fell over 6 percent in the afternoon but is still above $5,000 an ounce.
On Friday afternoon It was also revealed that Republican Senator Thom Tillis still intends to block the nomination, despite calling Kevin Warsh a “qualified candidate with a deep understanding of monetary policy.”
He points out that the Justice Department’s investigation into Powell poses an obstacle to approving the nomination. The threat carries particular weight because Thom Tillis sits on the Senate Banking Committee and is therefore involved in deciding whether the nomination is cleared for Senate approval. Without him, the Republicans will lose their majority in the committee.
“Protecting the Federal Reserve’s independence from political interference or legal threats is non-negotiable,” the senator wrote in a social media post.
