US President Donald Trump says he nominated Kevin Warsh for the position of US Federal Reserve chair due to the prospect of interest rate cuts.
Trump said in an interview with the US broadcaster NBC News he would not have proposed the former Federal Reserve governor for the position if Warsh had wanted interest rate hikes.
Trump said he believed Warsh understood he desired a looser monetary policy.
There was “not much” doubt in his mind that benchmark US interest rates will be lowered by the Federal Reserve, the president said.
Asked if Warsh understood Trump wanted him to lower interest rates, Trump said: “I think he does, but I think he wants to anyway”.
“I mean, if he came in and said, ‘I want to raise them’ … he would not have gotten the job. No,” Trump said in the interview on Wednesday, US time.
Trump had proposed Warsh as a successor to the current US Federal Reserve chairman Jerome Powell.
The US Senate still needs to confirm Trump’s candidate as the future head of the Fed.
Powell’s term as the world’s most important central banker is set to end in May.
Critics fear the independence of the central bank could be compromised with Warsh at the helm.
Trump wants lower interest rates, as he finds the current rate level of 3.5 to 3.75 per cent too high, despite the fact gradual reductions have been made.
Contrary to Trump’s often simplified portrayal, the Fed chair does not decide the key interest rate alone.
Instead, the 12-member Federal Open Market Committee meets at regular intervals and then votes on the future monetary policy course.
In addition to the seven governors of the central bank, the committee includes five regional bank presidents.
Among the five representatives of the regional Federal Reserve banks, the Federal Reserve Bank of New York president is a permanent member – the other four rotate annually.
With Reuters
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