FEDERAL RESERVE/JANET YELLEN/POLITICS/TRUMP AS PRESIDENT: “So Donald J. Trump tells The Wall Street Journal that he is no longer so sure he wants to replace Federal Reserve Chairwoman Janet Yellen when her term is up in February. Why would he want to nominate her to for another four-year term? And would she accept?
While understanding Mr. Trump’s decision-making process is, to say the least, challenging, he may have figured out (or have been advised) that any successor to Ms. Yellen would have to prove his or her anti-inflation bona fides by raising short-term interest rates more than she would. Given current economic conditions, the next Fed chair will decide how far and how fast to raise rates. As they anticipate the 2018 and 2020 elections, Mr. Trump and Republicans in Congress have good reason to favor Ms Yellen’s not-so-far and not-so-fast approach.
But the politics of reappointing Ms. Yellen are treacherous. She is distinctly unpopular with congressional Republicans. All 26 ‘no’ votes in her 2014 Senate confirmation came from Republicans, including the new chair of the Senate Banking Committee, Mike Crapo (R, Idaho.) (The vote was 56-26. Eleven Republicans voted ‘yes.’ Several, including Majority Leader Mitch McConnell, didn’t vote.) Although House Financial Services Committee Chairman Hensarling (R., Texas) doesn’t get a vote, he’d surely convey his displeasure to the White House. Ms Yellen is no fan of his eagerness to undo Dodd-Frank. Reappointing Ms. Yellen would consume a substantial amount of Mr. Trump’s political capital.”
-David Wessel, “Wessel’s Take: Why Trump Might Want to Give Yellen a Second Term,” The Wall Street Journal online, April 14, 2017 7:33am