Dive Brief:

• President Donald Trump in a tweet on Tuesday said he intends to nominate Judy Shelton and Christopher Waller to the Federal Reserve Board.

• Both Shelton and Waller have spoken in support of lowering short-term interest rates to spur growth even though rates remain historically low at 2.5%.

• Shelton has spoken in favor of bringing rates down to zero and has questioned whether the Fed should retain the power to set interest rates, while Waller challenged the December rate increase.

I am pleased to announce that it is my intention to nominate Christopher Waller, Ph. D., Executive VP and Director of Research, Federal Reserve Bank of St. Louis, Missouri, to be on the board of the Federal Reserve....

— Donald J. Trump (@realDonaldTrump) July 2, 2019

Dive Insight:

Shelton is the U.S. executive director of the European Bank for Reconstruction and Development and was an economic advisor to the Trump campaign. 

She has talked about spurring economic growth by pairing lower interest rates with the business-friendly steps the federal government has taken — deregulation, tax cuts, trade and energy policy reform — in the last two years.

In an interview with The Wall Street Journal earlier this year, she said, “When you have an economy primed to grow because of reduced taxes, less regulation, dynamic energy and trade reforms, you want to ensure maximum access to capital. The Fed’s practice of paying banks to keep money parked at the Fed in deposit accounts instead of going into the economy is unhealthy and distorting; the rate should come down quickly as the practice is phased out.”

In a tweet Tuesday, Shelton said, “I ... will strive to support the U.S. pro-growth economic agenda with the appropriate monetary policy.”

To maintain the dollar’s leading monetary role globally, she has shown sympathy for returning the dollar to the gold standard that ended in 1971. That’s a view President Trump shares, at least in concept. Writing an essay for the libertarian-leaning Cato Institute last year, she said, “If the appeal of cryptocurrencies is their capacity to provide a common currency, and to maintain a uniform value for every issued unit, we need only consult historical experience to ascertain that these same qualities were achieved through the classical international gold standard without sacrificing the sovereignty of individual nations.”

Waller is the executive vice president and director of research for the St. Louis Federal Reserve Bank. He also has been supportive of lowering the Fed’s overnight rate.

In an interview with Bloomberg last month, Waller questioned why the Fed raised rates in December. “We didn’t see any reason to raise rates for the sake of raising rates,” he said, referring to the lone vote not to raise rates by his boss, James Bullard, president and CEO of the Federal Reserve Bank of St. Louis and a member of the Fed’s rate-setting committee. 

The nominees must be confirmed by the Senate. President Trump’s last four Fed nominees have been withdrawn because of confirmation difficulty they faced.