Federal Reserve Governor Chris Waller has expressed his willingness to take on the role of the central bank’s head if asked by President Donald Trump. Waller, who previously accepted a position on the Fed’s Board of Governors following Trump’s outreach in 2019, stated that he would respond positively if approached again, though no such contact has occurred so far. Currently, Trump has been publicly criticizing Fed Chair Jerome Powell for not implementing interest rate cuts, concerned that his administration’s trade policies might spur inflation.
With the Federal Reserve’s upcoming meeting scheduled for July 29-30, Waller is advocating for an interest rate cut, citing potential limitations of tariffs on inflation and concerns over economic slowdown and private-sector hiring. Despite low unemployment rates, Waller points to underlying data suggesting a decline in the health of the labor market, emphasizing the need for the Fed to act proactively to avoid a hiring slowdown.
The consensus among the central bank suggests maintaining the benchmark interest rate in the range of 4.25%-4.50%, with only Waller and Fed Vice Chair Michelle Bowman supporting a more immediate cut. While some economists praise Waller’s arguments for lower rates, others note the pressure from the Trump administration criticizing Powell over cost overruns related to the renovation of the Fed’s Washington headquarters. Trump maintains that interest rates should align more closely with recessionary levels and has gone so far as to suggest Powell should resign.
The prospect of appointing Waller to succeed Powell has been discussed, as his presence would grant immediate voting rights on monetary policy. Other potential nominees include Treasury Secretary Scott Bessent, economic advisor Kevin Hassett, and former Fed Governor Kevin Warsh, who has been vocal about the need for “regime change” within the central bank. However, due to existing vacancies on the board, Bessent and Hassett cannot join until February when another seat becomes available.
While Waller acknowledges that waiting until September to cut rates may not significantly impact economic conditions, the Federal Reserve’s reluctance to act swiftly continues to frustrate Trump, especially following his return to office this year. The president appeared to contemplate the possibility of firing Powell, although his legal authority to do so is questionable. This ongoing tension raises concerns about the independence of the Federal Reserve and its ability to set monetary policy apart from political influence.
In light of these developments, finance leaders from the Group of 20 countries reaffirmed the crucial importance of central bank independence in a recent meeting in Durban, South Africa. They emphasized a commitment to price stability and a data-driven policy adjustment approach. Alongside this, key Republican members of the Senate Finance Committee stressed the necessity of maintaining Fed independence for optimal economic conditions, with Senator Mike Rounds highlighting the positive implications for the administration if markets recognize the Fed’s autonomy.
