President Donald Trump's next pick to lead the Federal Reserve may have a much more difficult time achieving the president's goals than he thinks, according to a report.
Kevin Warsh, who Trump has endorsed to succeed Federal Reserve Chairman Jerome Powell when he steps down in May, could take over the central bank at a time when the president is seeking to dramatically cut interest rates. However, justifying that among the Federal Reserve's Board of Governors may be more difficult than it seems, given the economic climate and policymakers' skepticism, Bloomberg reported on Tuesday.
"Even before the US and Israel launched a war in Iran, sparking a jump in oil prices and selloff in stocks, most Fed officials saw no compelling reason to rush additional interest-rate cuts," the report reads in part.
"Their rationale lies in the economic data: The labor market appears to be finding some stability, and inflation continues to hover above the central bank’s 2% goal," it added. "The conflict in the Middle East may only add to their caution."
Warsh has defended the president's calls to lower interest rates by arguing that productivity gains from new technologies such as artificial intelligence should outweigh economic concerns. But that stance has met fierce resistance inside the central bank, according to Bloomberg.
"This dynamic suggests that Warsh — assuming he’s formally nominated by Trump and confirmed by the Senate — could face resistance should he try to push through the steep, immediate cuts Trump has made clear he wants the next Fed chief to deliver," according to the report. "It could also mean that Warsh may struggle to persuade his colleagues and forge consensus — a key part of the chair’s job."
