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Trump wants to make mark on Fed, but could keep 'terrific' Yellen

October 25, 2017

President Donald Trump said he’s thinking about giving Janet Yellen another term as U.S. Federal Reserve chairwoman as he balances the desire to put his stamp on the central bank with the risk of changing leadership amid a stock market rally.

“I would certainly think about it,” Trump told Fox Business Network, according to the transcript of an interview, when asked about Yellen’s chances for renomination.

“In one way, I’d have to say, you’d like to make your own mark, which is maybe one of the things she’s got a little bit against her,” he said. “But I think she’s terrific; we had a great talk, and we’re obviously doing very well together if you look at the markets.”

Trump said he’s narrowed his decision to “two and maybe three people” and an announcement will come “over the next very short period of time,” adding “it won’t be a big shock.”

When Trump asked the interviewer, Lou Dobbs, who he prefers, Dobbs said Yellen “might be worth keeping.”

Positive earnings reports and steady overall economic growth propelled U.S. stocks to record highs earlier this week. Since her term as chair began in February 2014, Yellen has presided over a period in which the Standard & Poor's 500 Index has returned 55 percent and joblessness fell to 4.2 percent from 6.6 percent.

Trump said Oct. 23 that he’s “very, very close” to announcing his nominee to lead the U.S. central bank, but continues to hold financial markets in suspense. He’s reportedly narrowed the field to Yellen, Fed Governor Jerome Powell and Stanford University professor John Taylor.

Three people familiar with the matter said he is no longer considering National Economic Council Director Gary Cohn for the job. It’s unclear whether Kevin Warsh, a former Fed governor, has also been ruled out.
Show of Hands

In a lunch meeting with Republican senators on Tuesday, Trump surveyed the lawmakers about who they’d prefer among the candidates he’s considering. He didn’t announce a winner and most of the senators didn’t raise their hands. But of those who did, “I think Taylor won,” Sen. Tim Scott of South Carolina said.

The one thing that remains certain is that Trump has a chance to reshape Fed leadership during his first 18 months in office. He has already appointed Randal Quarles, a Treasury Department official under President George W. Bush, to lead the Fed’s financial regulatory efforts. Quarles is expected to pursue a rollback of some post-crisis regulation.

Even after Quarles’ appointment, three seats on the seven-member Board of Governors remain vacant. Additionally, the vice chairmanship has been empty since the departure this month of Stanley Fischer. If Yellen is not reappointed and steps down as a governor, Trump will get another slot to fill.

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