U.S. President Donald Trump said Friday he has offered a position on the Federal Reserve’s Board of Governors to Stephen Moore, a conservative economic adviser who has become an outspoken critic of the Fed’s interest-rate policy.
Mr. Moore, who has criticized the Fed for raising interest rates over the past year, is an economist at the conservative Heritage Foundation who helped draft Mr. Trump’s tax proposals in the 2016 campaign. As a nominee, Mr. Moore would face intense criticism in the Senate from Democrats, with whom he has clashed on several economic issues in his career as a commentator and policy advocate.
“I will be nominating Mr. Moore for the Fed,” Mr. Trump told reporters after landing in Palm Beach, Fla. “He’s going to be great on the Fed.”
Mr. Trump added in a tweet that Mr. Moore “will be an outstanding choice.”
The move by Mr. Trump seeks to elevate a loyalist to the Fed, an institution that the President has repeatedly criticized for raising interest rates, which he says have chilled economic growth.
In recent public writings and private meetings with Mr. Trump, Mr. Moore has pushed for the Fed to reverse at least two of the four interest rate increases that it approved last year. Mr. Moore blames those increases for a drop in commodity prices at the end of last year. He recently pushed the Fed to target commodity prices in setting interest rates, a view rarely advocated by economists and monetary policy-makers.
“The Fed is sucking the oxygen out of the economy and has created an economically debilitating deflation,” Mr. Moore said in an e-mail earlier this month. “Deflation shrinks the economy. The Fed should reverse its disastrous rate hikes” of September and December.
“The one guy who gets this is Trump,” Mr. Moore added. “He told me in a meeting last month that the Fed is preventing us from staying on 3- to 4-per-cent growth path.”
In an interview aired Friday morning on Fox Business Network, Mr. Trump appeared to echo much of Mr. Moore’s thinking, saying economic growth would have been higher last year if not for Fed rate increases and the wind-down of its asset purchase program, which some call “quantitative tightening.”
Mr. Trump has repeatedly criticized the choices being made by Fed chairman Jerome Powell, who he picked for the Fed’s top spot.
“Frankly, if we didn’t have somebody that would raise interest rates and do quantitative tightening, we would have been at over 4 instead of a 3.1-” per-cent growth, Mr. Trump said.
Asked if he had influenced Fed policy with his criticisms, Mr. Trump said, “I don’t know. I mean, look, I hope I didn’t influence, frankly, but it doesn’t matter; I don’t care if I influenced or not. One thing, I was right. But we would have been over 4 if they didn’t do all of the interest rate hikes. And they tightened, I mean, they did [US]$50-billion a month. I said, ‘What are we doing here?’ And so I’m not – 3.1 may be the best in 14 years; I’m not happy with it. We should have had much higher.”
The Fed had been on a steady campaign to raise interest rates and ushered in five consecutive quarters of rate hikes between 2017 and 2018. The Fed has since paused its increases and adopted a more “patient” approach amid signs of economic weakness both in the United States and abroad. The Fed on Wednesday signalled that it sees no interest rate increases in 2019, a departure from December, when it forecast two rate hikes this year.
Mr. Moore, who has a master’s degree in economics, was the founder of the conservative Club for Growth and a past member of The Wall Street Journal editorial board. His interest rate views have changed in recent years.
In 2015, when growth was slower and unemployment higher than it is now, he wrote a column criticizing the Fed for its asset purchase program and for refusing to raise interest rates, and warned that the Fed chairwoman at the time, Janet Yellen, was setting the stage for another financial crisis.
“The Fed refused to raise interest rates off zero in September, and, hello, that easy money policy is how we got into the mess in 2000 and then in 2008,” he wrote. “Wall Street cheered Janet Yellen’s decision to keep the cheap dollars flowing. Isn’t this all starting to sound familiar?”
In the past, Mr. Moore also advocated a return to the gold standard, which the United States abandoned in 1971.
Many Fed watchers criticized his nomination, even those who have called for keeping interest rates low to boost workers and growth.
“Stephen Moore is a particularly poor choice for the Federal Reserve Board,” said Tim Duy, an economics professor and Fed expert at the University of Oregon. “He appears more devoted to pursuing a far-right economic agenda than willing to understand the complexity of economic policy.”