April 21 (Reuters) – Federal Reserve Governor Christopher Waller on Tuesday said he would “absolutely” oppose any effort to try to fire Fed regional bank presidents over disagreements on interest rate policy.
“That’s not the design of the system. Period,” Waller said when asked at an event in Washington what he would do if asked to fire some of the reserve bank presidents because of their views on interest rates.
“So you would be against that?” David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, asked Waller in a follow-up question.
“I would absolutely be against that,” Waller said.
The exchange followed Waller’s speech laying out the case for overhauling the daily operations of the Fed’s 12 regional reserve banks, arguing that functions like human resources, technology support and deployment and procurement ought to be centralized and potentially consolidated. Waller said his proposal did not involve any changes to the regional bank leaders’ participation in U.S. monetary policymaking.
Wessel’s question to Waller, who was appointed by President Donald Trump, also comes amid a time of heightened concern about the Fed’s independence to set U.S. monetary policy, with Trump attempting to fire Fed Governor Lisa Cook and threatening to fire Chair Jerome Powell if he remains at the Fed after his leadership term expires next month.
A majority of the Fed’s seven-member Board of Governors could vote to remove a regional bank president, although that has never before occurred. Some Fed watchers have suggested that would open the door to a board majority seeking to cleanse the ranks of reserve bank presidents opposed to their own monetary policy stances.
A similar question was put earlier in the day to Kevin Warsh, Trump’s nominee to succeed Powell, at his confirmation hearing before the Senate Banking Committee. Warsh said his calls for “regime change” at the Fed were about its conduct of monetary policy.
(Reporting By Dan Burns; Editing by Chizu Nomiyama and Andrea Ricci )
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