Fed Nominee Shelton Approved by Senate Banking Committee
Fed Nominee Shelton Approved by Senate Banking Committee
Judy Shelton, a controversial nominee for the Federal Reserve’s policy-making board, was approved by the Senate Banking committee along party lines. Her nomination now moves on to the full Senate, where she is generally expected to be approved. Senate Majority Leader Mitch McConnell is likely to move the vote along quickly.
All 12 of the Democrats on the banking panel signed a letter to the committee’s chairman, Sen. Mike Crapo (R., Idaho), this month asking for a new hearing.
Shelton, an economic adviser to Mr. Trump’s 2016 presidential campaign, has been a proponent of the controversial idea of a return to the gold standard, which would limit the Fed’s ability to influence inflation and employment.
Before the coronavirus pandemic and related recession, the President regularly gave Fed Chairman Jerome Powell tongue lashings in his tweets. for keeping borrowing costs, in his view, too high. Shelton supported Trump’s calls for lower rates, after earlier criticizing the Fed for keeping rates too low during the tenure of President Barack Obama.
Next week sees a Federal Open Market Committee meeting July 28-29, but little news is expected to come forth.
Even so, Fed officials reportedly will discuss the potential for more stimulus from the central bank but it is perhaps a bit early for any real movement here. Undoubtedly, as this is the summer and the coronavirus does seem to be easing—at least in hospitalizations and deaths—the Fed might wait for more data.
Whatever is discussed will likely have to wait until the September meeting for realization, or perhaps latter, according to The Wall Street Journal. In terms of interest rates, what’s to discuss? They are already near zero and the central bank has repeatedly promised to keep them there until 2022.
The Fed might think about changing the composition of their purchases of US Treasury bonds and mortgage bonds toward longer-dated securities, as was done following the 2008 financial crisis, WSJ writes. There doesn’t seem to be any urgency given what the Fed has already done and the state of the economy. Finally, the Fed will conclude a yearlong review of the Fed’s long-run policy-setting strategy.
Last week, European Union leaders approved a €1.8 trillion ($2.06 trillion) spending package aimed at containing the economic downturn through new measures that could deepen the bloc’s economic integration. European Central Bank President Christine Lagarde has been urging EU leaders to strike a deal for such a fund.
The yield on the benchmark 10-year U.S. Treasury is 0.58% down from 0.63% last week.
Again, the next FOMC meeting: July 28-29. Little in the way of substantial changes in Fed policy expected.
