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Trump to nominate economist Clarida as new Fed vice chairman

Reuters
The vice chairman job at the Fed has been vacant since Stanley Fischer stepped down in October - © Ian Dagnall / Alamy Stock Photo

President Donald Trump said he would nominate Richard Clarida, an economist who advises fund manager Pimco, and Michelle Bowman, a Kansas banking regulator, for two key positions at the US Federal Reserve.

If they are confirmed by the US Senate, Mr Clarida would serve as vice chairman of the US central bank's board of governors and Ms Bowman would become a member of the board, according to a White House statement.

The vice chairman job, vacant since Stanley Fischer stepped down in October, is considered one of the most influential Fed positions alongside the chairman and the head of the New York Fed.

Mr Clarida, a professor at Columbia University who has worked as managing director and monetary policy analyst at Pacific Investment Management, is seen aligning with the Fed's current chairman, Jerome Powell, whom he last autumn called a "smart choice" for Fed chairman in an entry on a Pimco blog.

In earlier writings, he aligned with the core group of Fed economists who feel interest rates are likely to remain lower, and economic growth somewhat slower, than in the past.

But also warned in December that investors may be "a little too relaxed" about the threat of higher inflation.

Ms Bowman, the commissioner of the Kansas State Bank Commission since 2017, would fill a position at the Fed reserved for someone with community banking experience.

That seat has remained open since 2014, when the US Congress passed a bill requiring the Fed to reserve one seat on its policymaking board for someone familiar with the thousands of institutions with assets of less than $10bn (£7bn).

Ms Bowman's family owns the Farmers and Drovers Bank of Council Grove, Kansas, where she served a vice president from 2010 until her appointment as state bank commissioner. She is also familiar with Washington after stints on the staff of former Republican US senator Bob Dole of Kansas and as a deputy to former Homeland Security secretary Tom Ridge.

The country's smaller banks have complained frequently that the Fed's rules have become burdensome and too strict for institutions that pride themselves on knowing their customers – and their credit risks – in detail.

"She will be sensitive to the whole body of mortgage and capital regulations, which have become onerous on smaller banks," said Camden Fine, president of the Independent Community Bankers of America. "That is a perspective that most of the time has been missing" at the Fed.