Trump to nominate conservative economist Stephen Moore to Federal Reserve board

Stephen Moore a conservative commentator and former Trump campaign adviser has joined the president in criticizing the Federal Reserve

President Donald Trump said Friday that he will nominate Stephen Moore, a conservative economic analyst, to fill a vacancy on the Federal Reserve's seven-member board. "I have known Steve for a long time - and have no doubt he will be an outstanding choice!"

Trump - who, according to former Fed chair Janet Yellen, does not understand macroeconomic policy - has openly criticised Powell and the central bank's monetary tightening policy, saying that rate hikes hurt the economy, and tweeting in December "the only problem our economy has is the Fed".

"I believe the people on the Federal Reserve Board should be thrown out for economic malpractice", he said on radio in December.

Given his sharply partisan reputation, Moore could spark opposition among Democrats in the Senate. "Fed officials have noted that they would like to return the balance sheet to primarily Treasury assets, meaning that MBS (mortgage-backed securities) will continue to roll off, with the proceeds being invested in Treasury securities", he said.

Trump has been harshly critical of the Fed's rate increases last year even after the central bank this week announced that it foresees no hikes this year. None of the other members of the committee commented when contacted by Reuters about Moore's nomination.

On Wednesday, during its second monetary policy meeting of the year, the Fed voted to hold the benchmark federal funds rate steady. But we would have been over four (per cent growth) if they didn't do all of the interest rate hikes. That's a shift by the president, who would previously opted for Republican establishment Fed picks including Powell, Vice Chairman Richard Clarida and Vice Chairman for Supervision Randal Quarles.

Trump in his first two years in office has been able to reshape the central bank.

Titled "The Fed is a Threat to Growth, ' the article argued that Powell's 'tight-money policy" was holding back the economy.

In the same column, he urged Congressional Republicans to "put up a fight on the debt ceiling by requiring more budget discipline as a condition of higher debt levels".

The spread between yields on three-month Treasury bills and 10-year notes fell below zero for the first time since 2007 after USA manufacturing data fell short of estimates.

"The Fed is sucking the oxygen out of the economy and has created an economically debilitating deflation", Moore told The New York Times recently. History has not been kind to Mr. Moore's warnings, during the Obama administration, that the Fed was stoking inflation.

"His policies appear to be going the wrong way", Sumner said.

Chairman Jerome Powell cited low inflation, a slowing global economy and risks like US trade tension with China for the need to remain patient "for some time".

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