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Trump’s Fed pick wants the independent central bank to work with the White House and Congress

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Judy SheltonCNBC

  • Prospective Federal Reserve nominee Judy Shelton once again questioned whether the central bank should operate independent from political influence.
  • Shelton’s comments on central bank independence were likely to curry favor with President Donald Trump, who has repeatedly demanded lower interest rates. 
  • The White House said it would tap Shelton for one of two open seats on the Federal Reserve board in July, but has not formally submitted her nomination to the Senate.
  • Visit Business Insider’s homepage for more stories.

Prospective Federal Reserve nominee Judy Shelton once again questioned whether the central bank should operate independent from political influence, following months of unprecedented White House pressure on US monetary policy. 

In a conversation with UBS global macro adviser Beat Siegenthaler on the sidelines of the annual International Monetary Fund meetings in October, Shelton said that law dictated that the Fed “work hand-in-hand with Congress and the president to meet certain strategic economic goals for the US.” 

“I don’t see any reference to independence in the legislation that has defined the role of the Federal Reserve for the United States,” Shelton told Siegenthaler, according to a transcript of the interview reviewed by Bloomberg

Shelton did not respond to emails and phone calls from Business Insider. The White House did not offer comment on the nomination. 

Shelton’s comments on central bank independence were likely to curry favor with President Donald Trump, who has repeatedly demanded lower interest rates and other measures to juice the economy. 

The White House said it would tap Shelton for one of two open seats on the Federal Reserve board in July, but has not formally submitted her nomination to the Senate. Several of his past nominees withdrew from consideration over the past year after it became clear they would not receive enought support to be confirmed. 

In an interview with Business Insider in June, Shelton would not directly say whether she thought the central bank was an independent institution. She said that administrative operations between the Fed and the Treasury Department made them “fiscally incestuous.”

“That’s a hot-button issue,” she said. “It’s the kind where people will say, oh, she doesn’t believe in the independence of the Federal Reserve. So then, it will take a longer answer. Whereas I suppose, it’s easy to say no, it’s 100% independent, and they should never even talk to each other. That it should be more strict, and I don’t think they should be allowed to read newspapers. You could say that. But I don’t think that’s realistic.”

In a Wall Street Journal op-ed in September, Shelton said the Fed should “pursue a more coordinated relationship with both Congress and the president.” She argued those institutions could work together to achieve economic goals, including on trade. 

“With no consistent free-trade principles governing global monetary policy, the Fed must take proactive steps to ensure that the U.S. can compete successfully,” Shelton wrote.

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