Economy: Donald Trump meets Yellen before deciding who will chair the Federal Reserve

The selection process enters the final rectal with five names on the table. 
Economy: Donald Trump meets Yellen before deciding who will chair the Federal Reserve

The race to nominate the person who will lead the US Federal Reserve (Fed) from February enters the decisive phase. Donald Trump has received Janet Yellen, the current president of the world's most powerful central bank, on Thursday. It closes the round of interviews with potential contenders who, in addition to Yellen herself, include Governor Jerome Powell, financier Kevin Warsh, economist John Taylor and banker Gary Cohn. Wall Street has followed the process calmly.

This Thursday at noon was the second meeting held by Trump and Janet Yellen since the president's arrival at the White House. The intention is that the name of the one chosen to pilot the Fed be known before his next trip to Asia, which is scheduled to begin on November 3. Tradition tells the Fed president to be an economist. Also, the new White House tenant should keep the person in charge of the central bank. That should be a guarantee for Yellen to renew for a second term. But it's not enough.

Donald Trump meets Yellen: Five candidates

If he chose the change of command, the most continuous option would be that of Governor Jerome Powell. He is the favorite in the Wall Street pools and also the Treasury Secretary because it is both favorable to monetary laxity and deregulation. The other candidate with an economic profile is Taylor. It is the black horse in this race. The Stanford professor has known for a rule followed for 25 years as a guide to calculate the neutral interest rate.

The environment of Donald Trump assures that the president was impressed with its profile after the encounter. It is the favorite Mike Pence, Vice President of the US, and would also have support among conservative Republicans in the Senate, which argues that rate decisions of the Federal Reserve are guided by a mathematical formula to avoid politicization.

There's a catch with Taylor. Trump wants interest rates to stay low in the United States to continue supporting economic recovery and job creation. According to the Taylor model, the price of money should be close to 3%, three times higher than the current one. His choice, in any case, does not imply that interest rates will grow faster.

Warsh, on the other hand, has the profile that most would conform to Trump's doctrine and the choice of financier would allow him to print a change in the Fed if he really seeks to distance himself from the policies followed by Yellen. The same goes for Cohn. Former Goldman Sachs executive is also involved in tax reform.

The appointment, which lasted only half an hour and did not appear on the official agenda, coincided with lunchtime. The White House avoided reporting the details of the conversation and neither did pictures of the two leaders circulate. What they assume in the parquet is that an option that is different from that of Yellen will lead to introducing greater discipline in the monetary strategy of the Federal Reserve, as Trump seeks, but without reaching the rigidity of Taylor's formula.
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