U.S. President Donald Trump plans to nominate former pizza chain executive and Republican presidential candidate Herman Cain for a seat on the Federal Reserve Board, where he will help set interest rates for the world’s biggest economy.
“I have recommended him highly for the Fed,” Trump said in a press conference Thursday. “I’ve told my folks that’s the man.”
Trump has been a vocal and strident critic of the Fed’s rate hikes under Jerome Powell, whom the president picked two years ago to chair the U.S. central bank. Trump’s other Fed appointees have also supported the Powell Fed’s rate hikes, which the president has said hurt the economy.
This year the Fed has put rate hikes on hold, citing a slowing economy and risks from overseas. Trump, meanwhile, has continued to rail against the Fed, even as he has said he will nominate conservative commentator Stephen Moore, a proponent of rate cuts, for a second vacant seat on the Fed Board.
Asked if he is sending a signal to the Fed with the pair of nominations, Trump said: “None whatsoever. He’s a highly respected man. He’s a friend of mine. He’s somebody that gets it, and I hope everything goes well — but Herman Cain is a very good guy.”
Board members have a vote on setting interest rates every time U.S. central bankers meet, making them among America’s most powerful officials for economic policy. At full strength there are 19 Fed policymakers, including 12 regional Fed bank presidents.
Cain in February told Fox Business Network he believed deflation is a bigger worry, a view that suggests he is not inclined to support rate hikes aimed at keeping inflation in check.
Still, Cain’s policy views are not entirely clear: in the same February interview, he said he wanted to use wages as a factor in deciding monetary policy, which in the context of recently rising pay could suggest he would support rate hikes.
Cain’s history
Cain, who is 73, has little direct experience with monetary policy, but what track record he does have suggests a penchant for tighter, not looser, policy.
In the 1990s he served as a director at the Kansas City Fed, one of the 12 regional Fed banks that help process payments in the U.S. banking system and whose presidents take turns voting on rate policy. He chaired the board from 1995 to 1996, when its president was the famously hawkish Thomas Hoenig.
Minutes of meetings during that period, obtained by Reuters from the Fed, show that the bank’s directors were among those who repeatedly asked the Washington-based Board of Governors to raise rates when most of the boards of directors for the other Fed banks opposed any hike. The concern, according to the minutes, was that continued economic growth could produce price pressures that needed to be contained by tighter policy.
Cain made his fortune as chief executive of Godfather’s Pizza before launching a bid for the Republican presidential nomination in 2012.
He led opinion polls for a while during the Republican nominating contests, buoyed by his signature 9-9-9 tax proposal, which would have levied a flat 9 percent corporate, income and sales tax.
Romney criticism
But his popularity slipped amid sexual harassment allegations from several women, which he denied as “completely false.”
Cain’s likely nomination drew criticism from Utah Republican Senator Mitt Romney.
“I doubt that will be a nomination,” Romney told Politico. “But if it were a nomination, you can bet the interest rates he would be pushing for. … If Herman Cain were on the Fed, you’d know the interest rate would soon be 9-9-9.”
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