The next chairman of the U.S. Federal Reserve, according to U.S. President Donald Trump on Wednesday, will be someone who supports lower interest rates "by a lot."
"I'll soon announce our next chairman of the Federal Reserve, someone who believes in lower interest rates, by a lot, and mortgage payments will be coming down even further," Trump stated.
In the first year of his second term in office, Trump made these remarks during a national speech highlighting his achievements in the areas of national security and the economy.
He has previously stated that early in the upcoming year, he will reveal the person he has selected to succeed current Fed Chair Jerome Powell.
White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh, and current Fed Governor Chris Waller are all acknowledged finalists who support lowering interest rates.
However, none have made it clear that they would pressure the US central bank to cut interest rates as low as Trump has called for, sometimes as low as a crisis-level 1%.
Even his most recent appointee, Governor Stephen Miran, does not support a rate that is even close to the present range of 3.5% to 3.75%.
Although Trump has frequently stated that he wants mortgage rates to drop, the Fed's power over interest rates has little impact on the cost of longer-term borrowing.
These are usually impacted by longer-term rates, such the yield on a 10-year Treasury note, over which the Fed has less control.
Overall, that rate hasn't changed much in the past year and is influenced by investors' predictions for inflation and U.S. economic growth.
Since Labor Day, mortgage rates have remained in the 6.3%–6.4% area with no signs of declining. Last week, Trump told the Wall Street Journal that he was leaning either Hassett or Warsh to lead the U.S. central bank going forward.
However, interviews resumed on Wednesday, including a meeting with Waller, a steadfast supporter of Fed independence and one of the early proponents of lower rates among current Fed policymakers.
Trump told the newspaper that he believed he should be consulted on interest rate setting by the next Fed chair. Usually, presidents let the Fed make rate decisions.
Generally speaking, that is no longer done. It was once done on a regular basis. "It ought to be completed," Trump declared. It doesn't mean that he should follow our instructions exactly, in my opinion. However, we're I'm a wise voice that ought to be heard."
