By Nick Timiraos
WASHINGTON -- President Trump said Friday he would nominate
former campaign adviser Stephen Moore to serve on the Federal
Reserve's board of governors, which would place a fierce critic of
the central bank's leadership inside the consensus-oriented
institution.
Mr. Trump made the offer to Mr. Moore earlier this past week, an
administration official said, after reading an opinion article Mr.
Moore and a co-author wrote criticizing Fed Chairman Jerome Powell,
a regular target of Mr. Trump's disapproval. The article was
published last week in The Wall Street Journal, where Mr. Moore
previously worked as an editorial-page writer.
"I have known Steve for a long time and have no doubt he will be
an outstanding choice," Mr. Trump said on Twitter Friday. In a
brief telephone interview before Mr. Trump's announcement, Mr.
Moore said he would be eager to serve in the position.
Mr. Moore hasn't gone through the customary vetting process that
is typical before a presidential announcement, the official said,
which means it could take weeks or months before the nomination is
formally submitted for Senate confirmation.
The Fed's seven-member board has two vacancies.
Confirmation of Mr. Moore, a commentator on CNN, would bring a
more partisan political advocate to a Fed board typically populated
by technocratic policy veterans. He has veered from criticizing the
Fed's easy-money policies under President Obama, to opposing the
Fed's moves to tighten policy after Mr. Trump's election. He has
been a vocal supporter of Mr. Trump's policies to cut taxes and
regulations.
In recent months, Mr. Moore has echoed Mr. Trump's complaints
about the Fed's decisions last year to raise borrowing costs,
saying they are holding back economic growth. "The Fed is a
disaster," Mr. Moore said in a Journal interview last December. "We
should have a discussion in this country about whether we need a
Fed."
Mr. Moore also said in the interview he believed Mr. Powell
should resign. "He's totally incompetent," he said. "Everyone's
saying he has to be independent. Well, what do we do when we have
someone at the Fed who doesn't know what he's doing?"
He added, "If he's not responsive to the president, then who's
he responsive to?"
In a radio interview last December, Mr. Moore said Mr. Trump
should be allowed to fire Mr. Powell. "The law says he can replace
the Federal Reserve chairman for cause. I would say, well, the
cause is that he's wrecking the economy," he said.
A Fed spokeswoman declined to comment on Friday.
Mr. Moore's views on monetary policy have often placed him at
odds with mainstream thinking. He has advocated for setting
interest rates with the goal of maintaining stable commodity
prices, which are heavily influenced by global demand, especially
from emerging-market economies, especially China. Critics of such
an approach say it would lead to considerable interest-rate
volatility and that it would set rates based on a small segment of
economic output.
All four of the Fed's rate increases last year were unanimous.
Its rate-setting committee includes the board members, the New York
Fed president and four of the other 11 regional Fed presidents who
vote on a rotating basis.
Mr. Moore's recent opposition to the Fed's efforts to unwind its
postcrisis policies is relatively new. For years, he argued against
the Fed's postcrisis policies to keep rates low and to buy
long-term bonds to stimulate growth. He warned the measures would
stoke high inflation and erode the value of the dollar, which
didn't materialize.
In 2014, for example, he said the central bank should quickly
unload hundreds of billions of dollars of bonds it purchased to
stimulate growth. "The longer it holds onto these securities, the
greater the danger the Fed will not be able to control future
inflation," he wrote with a colleague at the Heritage Foundation, a
conservative think tank where he is a visiting fellow.
The Fed opted against any active bond sales, and the much more
passive approach it adopted -- allowing some securities to mature
without replacing them -- has been heavily criticized by Mr. Trump
in recent months for being too heavy handed.
Mr. Moore founded and served as president of the Club for
Growth, a conservative advocacy group, and he remains close to
Lawrence Kudlow, who became director of the White House National
Economic Council last year.
Reaction to Mr. Moore's selection suggested a contentious Senate
confirmation battle could loom. "He's a complete ideologue, and
what the Fed doesn't need is a complete ideologue," said David
Shulman, senior economist at the UCLA Anderson Forecast. "He's very
sycophantic to the president. Trump found his toady."
George Selgin, a monetary-policy researcher at the libertarian
Cato Institute who has also been a frequent critic of the central
bank, called Mr. Moore "unfit" to serve at the Fed. This month's
WSJ op-ed, Mr. Selgin said, didn't accurately characterize price
pressures in the economy. "A board member should know the
difference between inflation and deflation," he said.
"Moore's monetary commentary has, for well over a decade, been
relentlessly partisan, illogical and fact-fudged," said Benn Steil,
director of international economics at the Council on Foreign
Relations.
Mr. Moore's supporters said the pick would help shake up
entrenched thinking. "The results of the Fed's consensus-driven
approach over the last 20 years" have yielded poor results, said
J.W. Verret, a law professor at George Mason University who is
friends with Mr. Moore.
The White House isn't as far along in narrowing down a list of
candidates for the second Fed vacancy.
Mr. Trump previously nominated former Fed economist Nellie Liang
for one of the vacancies. She withdrew from consideration in
January after the Senate didn't act on her nomination last
fall.
In 2017, the president nominated Carnegie Mellon economist
Marvin Goodfriend. A Senate committee advanced his nomination last
year on a party-line vote, but the nomination expired with the
adjournment of the last Congress because it never received a vote
on the Senate floor.
Nominations to the Fed's board are the primary way for a White
House to influence central-bank policy. The 14-year terms are
staggered, but because of retirements and because the Senate in
2016 didn't act on two of President Obama's nominations, Mr. Trump
has had an unusual opportunity to remake the Fed's board.
He tapped Mr. Powell in November 2017 to succeed then-Chairwoman
Janet Yellen in February 2018. He has also filled three other board
seats, including those now held by Vice Chairman Richard Clarida
and Randal Quarles, the vice chairman for bank supervision.
One challenge for the White House is that many conservative
economists or policy veterans who are popular with Senate
Republicans have for many years argued against the kind of
easy-money policies advocated by Mr. Trump.
Mr. Trump began sharply criticizing the Fed's moves to raise
rates in the second half of last year. After the Fed raised its
benchmark rate in a unanimous decision last December, Mr. Trump
vented to his advisers about firing Mr. Powell.
Mr. Powell has said he won't resign from his post if asked and
that he doesn't believe he can be dismissed over a policy dispute.
Mr. Trump dined at the White House last month with Mr. Powell and
Mr. Clarida.
The Fed signaled Wednesday it is done raising rates. Mr. Powell
at a press conference cited slowing global economic growth,
restrained inflation pressures and political uncertainty, including
from the Trump administration's tariffs and trade negotiations, as
prompting that pivot.
Mr. Powell has repeatedly said political considerations never
enter into the Fed's policy decisions, and he has avoided
responding directly to any of Mr. Trump's broadsides.
--Paul Kiernan contributed to this article.
Write to Nick Timiraos at nick.timiraos@wsj.com
(END) Dow Jones Newswires
March 22, 2019 17:05 ET (21:05 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.