(Reuters) – A funny thing happened on the way to the U.S.-China trade deal signing: President Donald Trump may have tipped his next pick for head of the Federal Reserve — if he gets the chance.
FILE PHOTO: Kevin Warsh, Fellow in Economics at the Hoover Institution and lecturer at the Stanford Graduate School of Business, speaks during the Sohn Investment Conference in New York City, U.S., May 8, 2017. REUTERS/Brendan McDermid/File Photo
Among the dozen or so diversions Trump took in rambling introductory remarks before signing his long-sought trade deal was a nod to one guest who did not have a clear stake in the long-awaited agreement between the world’s two largest economies, former Fed governor Kevin Warsh.
Warsh, who was the youngest person ever appointed to the Fed board and is now a fellow at Stanford University’s Hoover Institution, was on the shortlist for Fed chair in 2017. Trump instead chose Jerome Powell, and he has regretted it almost from the start when Powell raised interest rates.
“Why weren’t you more forceful when you wanted that job? Why weren’t you more forceful, Kevin?” Trump told Warsh in front of the crowd gathered in the White House East Room for the U.S.-China Phase 1 deal-signing ceremony.
“You’re a forceful person,” Trump continued. “In fact, I thought you were too forceful, maybe, for the job, and I would have been very happy with you. But Kevin, thank you for being here. You understand that very well, right?”
Trump would have to win re-election in November in order to have another chance to name a Fed chair. Powell’s four-year term as Fed chair expires in 2022. Few expect that Trump would reappoint Powell given his repeated attacks.
Trump followed his comments on Warsh by veering into other familiar Fed complaints – that the dollar is stronger than he would like and that countries like Germany have negative interest rates when U.S. rates are substantially higher. He blames Fed policy under Powell for both.
“Bothers me when Germany and other countries are getting paid to borrow money,” Trump said.
Trump’s remarks quickly caught the attention of economists on social media, several of whom wondered why Trump believes Warsh would be the “low rates guy” he pines after for the Fed chair job. Warsh resigned from the Fed in 2011 after voicing criticism of the central bank’s bond-buying program, known as quantitative easing, which the U.S. central bank undertook in response to the financial crisis in a move to lower long-term interest rates and stimulate the economy.
“That would be interesting since Warsh’s first & last instinct is to hike rates,” Joseph Brusuelas, chief economist at international tax firm RSM, said on Twitter.
Reporting by Dan Burns; Editing by Leslie Adler