President Donald Trump has been critical of key members of the US Federal Reserve and has displayed his frustration on twitter on many occasions, in some cases making threats. More recently he has said that he will nominate members to Fed Governor positions to make changes, their names are Christopher Waller and Judy Shelton. These names of course will need to be approved. Shelton was named by Trump for a government post and she now seems to be a candidate for one of the Fed positions, putting a Trump friendly in the seat. Mr Waller is now working in the research department at the St Louis Fed and is not a front line or popular figure as he works behind the scenes in the bank. His relationship with Trump is not fully known. We sourced CNBC, an article by Jeff Cox for this piece, as well as other sources re the Federal Reserve.
Our Views: According to sources the Waller and Shelton votes would be on the Dovish side while keeping Chairman Jerome Powell, Richard Clarita and New York Fed President John Williams in the key seats, allowing the system to tilt toward the Trump views. This type of strategy has been done in the past at many Central Banks but the openness that Mr Trump demonstrates is a bit shocking to many in markets. This move would be an insurance policy for Trump in a weakening economy in 2019 and 2020, possibly supporting him in a nasty trade war with China.