Waller Confirmed for Fed With Shelton’s Nomination Still in Limbo
(Bloomberg) -- The Senate confirmed Christopher Waller to serve on the Federal Reserve Board, but the status of President Donald Trump’s second nominee, Judy Shelton, remained in limbo amid opposition from Democrats and some Republicans.
Senators voted 48-47 to put Waller on the U.S. central bank, concluding a confirmation process that had been dragged out for months because of controversy surrounding Shelton, who was nominated by Trump at the same time.
Waller, 61, becomes the fourth Trump pick to join the seven-member Fed board. He is viewed as a policy dove who will probably give full backing to the central bank’s projection to hold interest rates near zero to support the U.S. economy during the coronavirus pandemic.
“I would certainly not expect him to be a dissenting voice given the current policy trajectory, and actually I would expect him to reinforce the current trajectory,” said Roberto Perli, partner at Cornerstone Macro LLC.
Fed officials, who next meet Dec. 15-16, have signaled they expect to keep interest rates near zero at least through 2023. It is unclear if Waller could be sworn in quickly enough to take his seat at the table in time for the gathering.
Waller, who gained his Ph.D. in economics 1985 from Washington State University, currently runs the research department at the central bank’s St. Louis branch where his boss, James Bullard, has been an outspoken advocate for lower interest rates in recent years.
“The Senate’s confirmation of Chris Waller to become a Fed governor is fantastic news,” Bullard said in a statement. “He exemplifies the bank’s longstanding tradition of thought leadership in monetary policy and macroeconomic research.”
Waller helped develop Bullard’s dovish policy position, based on an outlook of an economy mired in a state of low inflation and low growth. It’s a stance that raised eyebrows when introduced in June 2016, but has since been vindicated by Fed rate cuts and its recent commitment not to preemptively tighten monetary policy even as unemployment falls.
“We didn’t see any reason to raise rates just for the sake of raising rates,” Waller said in a June 2019 interview with Bloomberg Radio. He has declined interview requests since his nomination.
Waller’s decades of research show a ranging intellect probing everything from government corruption to political attacks on the central bank. His most-cited academic work has focused on central-bank independence. He’s called it a “key tool” in ensuring that the government won’t misuse monetary policy for short-term political gain.
“Chris Waller will be a great addition to the Board,” said David Beckworth, senior research fellow at the Mercatus Center of George Mason University. “He will bring both a solid theoretical background in monetary economics as well as practical experience doing monetary policy.”
Shelton’s chances for confirmation have been dwindling since Democrats joined by three Republicans blocked action on her confirmation Nov. 17. The GOP lost a critical vote Wednesday when Arizona Democratic Senator-elect Mark Kelly was sworn in to replace GOP Senator Martha McSally.
Senate Majority Leader Mitch McConnell insists he still could try to confirm her before Trump’s term ends on Jan. 20, but he’s announced no schedule to do so.
While Trump could continue his push to get Shelton confirmed before President-elect Joe Biden is sworn in, Republicans could lose control of the floor agenda on Jan. 5 when two Senate-seat special elections in Georgia determine control of the chamber. Even if the GOP keeps the Senate, McConnell may never get the votes he needs on Shelton without some unexpected absences by senators opposing her.
Trump previously worked to place four other people to fill the two vacant board seats, all of whom failed to make it to confirmation.
©2020 Bloomberg L.P.