Federal Reserve Governor Chris Waller, an advocate for an immediate interest rate cut, said on Friday he would accept the job as head of the central bank if asked by President Donald Trump, but so far Trump has not contacted him about it.
“In 2019 the president contacted me and said, ‘Would you serve?’ And I said yes,” Waller told Bloomberg Television, referring to Trump’s appointment of him to the Fed’s Board of Governors. “If the president contacted me and said, ‘I want you to serve,’ I would do it. But he has not contacted me.”
Trump has launched a barrage of nearly daily criticism at Fed Chair Jerome Powell over the central bank’s reluctance to cut rates due to concern the administration’s trade and tariff policies will increase inflation.
Waller favors a rate cut at the Fed’s upcoming July 29-30 meeting because he feels the tariffs are likely to have a limited impact on inflation, and he is concerned the economy and private-sector hiring are starting to slow.
Though the unemployment rate is low, Waller said underlying data “are not indicating a super healthy private-sector labor market,” and the Fed should “get ahead” of a possible hiring slowdown.
The central bank is widely expected to keep its benchmark interest rate steady in the 4.25%-4.50% range at its upcoming meeting. Only Waller and another Trump appointee, Fed Vice Chair for Supervision Michelle Bowman, favor a cut that soon, though eight of their colleagues have indicated a reduction in the policy rate could happen in September.
Waller, who has said explicitly that his rate stance is “not political,” has been credited by economists for making a cogent case for lower rates, even as administration officials have tried to amplify pressure on Powell over cost overruns in a renovation of the Fed’s headquarters in Washington.
Trump, who feels rates should be slashed to levels more aligned with a recession, has repeatedly said Powell should resign. Powell has vowed to remain Fed chief until his term expires in May.
Waller “is not talking about cost overruns on the Eccles Building or lowering the cost of government finance or ‘regime change,’ but he is talking about the shifting balance of risks in the economy,” Neil Dutta, head of economics at Renaissance Macro Research, wrote in an analysis that argued appointing Waller to succeed Powell was “the most obvious way” for Trump to boost his impact at the Fed.
Casting call
As a sitting Fed governor, Waller would have an immediate vote and voice on policy if tapped to succeed Powell. Others mentioned as possible nominees include Treasury Secretary Scott Bessent, White House economic adviser Kevin Hassett, and Kevin Warsh, a former Fed governor and perennial critic of the central bank since leaving its Board of Governors in 2011. In an extended television interview this week, Warsh said the Fed needed “regime change.”
As it stands, Bessent, Hassett or Warsh could not join the central bank’s seven-member board until Fed Governor Adriana Kugler’s seat expires in February. Bessent said this week a “formal process” was underway to choose a successor to Powell, who was elevated from governor to the Fed’s top job by Trump in 2018 but quickly fell out with the president in a similar dispute over interest rates.
While Waller, a former economics professor and research director at the St. Louis Fed, acknowledges that cutting rates in September rather than in two weeks wouldn’t matter much to the economic outcome, the Fed’s reluctance to reduce rates has stoked Trump’s anger since he returned to office in January.
The president seemed ready to try to fire Powell earlier this week. Though his ability to do so is legally doubtful, the lingering threat of a move against the Fed chief has made the economic logic for or against a rate cut seemingly secondary to the debate about the implications of Trump’s actions for the Fed’s independence in setting monetary policy.
Central banks’ ability to focus on inflation in setting rates and not, for example, to help finance government spending, as Trump says he wants, is widely accepted as a staple of sound economic management and the best way to keep inflation in check.
Finance leaders from the Group of 20 countries, including a representative from the US Treasury, issued on Friday a final communique stressing the importance of central bank independence following a two-day meeting in Durban, South Africa.
“Central banks are strongly committed to ensuring price stability, consistent with their respective mandates, and will continue to adjust their policies in a data-dependent manner. Central bank independence is crucial to achieving this goal,” the communique said.
Key Republican members of the Senate Finance Committee, which would have to confirm a new Fed chief or governor, also emphasized the point this week. Powell has made building strong ties in Congress a key aspect of his tenure as Fed chief.
“It really is best for the economic conditions in our country that the markets understand that the Fed really is independent. And I think that will pay dividends for the administration,” Republican Senator Mike Rounds told reporters this week. “I personally have a good working relationship with the chairman. I’m going to continue to have that. And I respect the independence that he is trying to maintain.”
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