By Ann Saphir
Feb 2 (Reuters) – Kevin Warsh, President Donald Trump’s nominee to be the next Federal Reserve chief, faces a “tall task” in leading the U.S. central bank, particularly if he aims to convince the members of the policy-setting committee to go along with him on monetary policy decisions, Atlanta Fed President Raphael Bostic said on Monday.
Bostic, who will close out eight and a half years as the head of the Atlanta Fed at the end of this month, said he believes the central bank should not cut rates at all this year, a view that several of his colleagues also share. Trump said he picked Warsh in part because he agrees with the president that borrowing costs should be lower.
“If you want to have policy enacted or go in a direction that you want, you’ve got to convince them to go along, and in order to do that, you’ve got to build a relationship with them,” Bostic said at a Rotary Club of Atlanta event. “You have to build their trust. You have to show your wisdom and guidance. And those things don’t happen overnight. And so it’s just a huge undertaking.”
Fed policymakers last week voted 10-2 to keep the central bank’s benchmark interest rate in the current 3.50%-3.75% range, and signaled they are in no rush to reduce it.
With the economy as strong as it is and the labor market now stabilized, cutting rates “would make it very unlikely, if we did that, for us to get our inflation back down to our target or even get it on a trajectory to that,” Bostic said. “So I think this is the time to be patient.”
Fed Chair Jerome Powell, who has been consistently in Trump’s crosshairs for not cutting rates as much and as fast as the president has wanted, will end his term as central bank chief in mid-May.
(Reporting by Ann Saphir; Editing by Chris Reese and Paul Simao)
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