Trump Picks Kevin Walsh for Fed Chair as Tensions Rise (Full Transcript)

[00:00:00] Speaker 1: Welcome back to the program. Now President Trump has confirmed he has nominated Kevin Walsh to be the next chair of the US Central Bank, the Federal Reserve. The appointment will still need to be approved by Congress where some lawmakers on both sides have said they will oppose it unless the criminal investigation into the Fed and the activities of current chair Jerome Powell are dropped. Now Mr. Walsh previously served on the Fed's Board of Governors and has aligned himself with Trump's view that interest rates should be lower in the world's biggest economy. Well with me is our business correspondent Mark Ashdown. I suppose Mark the first question I should ask you is why Kevin Walsh? Why did Donald Trump choose him?

[00:00:42] Speaker 2: Well let's have a little canter through his CV shall we? As you mentioned he was a Fed Governor from 2006 to 2011, 55 year old economist, a New Yorker. He's a fellow at the right-leaning Hoover Institution which gives you an idea. Serves on the board of UPS, the logistics global supply chain firm. So stellar CV, tick. He's been around the block on Wall Street, it's fair to say. Another tick, so he's well known. He was interestingly considered for the role of Fed chair during Trump's first term. He was interviewed for it back in 2017. So he's been in the running, certainly not nailed on. There's been a lot of names around, the rumour mill of course been whirling. So not a surprise necessarily and it's also unclear really whether he was in fact Donald Trump's first choice.

[00:01:22] Speaker 1: Interesting, but there's thoughts that he's aligned himself more to President Trump's way of thinking.

[00:01:27] Speaker 2: Absolutely yeah. When does he stand on policy? He's been an outspoken critic of the Fed. He's not a fan of this ultra-loose monetary policy they've pursued since the financial crash back in 2008. Interestingly though he has a reputation as something of a hawk. So worried about high inflation, not so worried about high interest rates. I think that's going against the grain really of what Trump has been after. We know he's been putting a lot of pressure on the Fed chair Jerome Powell to lower rates quickly. He thinks that will help boost the economy. So I think that's helping to sort of calm the markets, calm commentators that he won't be an all-out stooge if you like of Donald Trump, but certainly yes as you say his instincts are for lower rates at the moment. So there's going to be an interesting balance there.

[00:02:13] Speaker 1: President Trump has had quite a stormy relationship certainly with the current chair. I think the Labour Party called him a moron in the last couple of days. Are we expecting this to be a little bit more of a happy relationship?

[00:02:24] Speaker 2: Yeah I think there's no love lost between Donald Trump and current Fed chair Jerome Powell. Fair to say. If we look at how Donald Trump announced this nomination, of course he nominates, it has to be ratified, signed off by Congress. I have known Kevin for a long period of time. He said I have no doubt he will go down as one of the in capital's great Fed chairman, maybe the best. On top of everything else he says he is central casting. He will never let you down. We're all still trying to work out what he might mean by the phrase central casting. But yeah the market's been pretty muted. The US has known of course for an hour or so. Gold has dropped. Of course precious metal seen as a safe haven when times are troubled. Interesting that's dropped. Now is this a sort of rebalancing moment maybe for portfolios? Traders thinking well do I back equities? Now move money back into companies because we're looking at a bit more stability. Where are we with rates? Well just this Wednesday the Fed said it would keep that key lending rate between 3.5% and 3.7% as expected. But it's the comments that are really important. Jerome Powell again spoke about the independence of the Fed. How important that is. Credibility said once you lose it it's difficult to restore. As you mentioned he's under criminal investigation. He says orchestrated by Donald Trump to increase the pressure on the Fed. Where will that go? Will there be some political pressure to make that go away? Draw a line on that before all this gets signed off. But certainly one way or another we are getting a new chair of the Federal Reserve. One of the biggest roles in the US. They set the parameters for the world's largest economy. I'll leave you with some comments from Donald Trump on Kevin Walsh back in December. He thinks you have to lower rates he said. So we will see in the spring where we get to with that.

[00:03:57] Speaker 1: His choice central casting that does seem quite appropriate coming from the the king of reality TV broadcasting Thank you very much Mark Ashton, our business correspondent.