U.S. President Donald Trump plans on Monday to announce the nomination of Richard Clarida, a respected economist and Pacific Investment Management Co. global strategic adviser, as vice chairman of the Federal Reserve, according to a White House official.
Trump will also announce his intention to nominate Michelle Bowman, state bank commission of Kansas, as a Fed governor, the official said. The Wall Street Journal first reported the plans to nominate Clarida and Bowman.
If confirmed by the Senate, the 60-year-old Clarida would bring a mix of skills to the job of the central bank’s number two, from knowledge of financial markets gained during more than a decade at asset manager Pimco to insights into how Washington works from his time at the Treasury Department under President George W. Bush.
A long-time professor at Columbia University, he would replace Stanley Fischer, who stepped down as vice chairman in October.
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“I would describe him as centrist and pragmatic,” said New York University professor Mark Gertler, who has co-written a number of research papers with Clarida. “He has a nice balance between understanding and contributing to what the academic literature has to say and very practical, real world knowledge.”
Clarida will join the Fed as it pursues a gradual series of interest rate hikes and a reduction in its bond holdings under the auspices of its new chairman, Jerome Powell. In recent testimony to Congress, Powell gave an upbeat review of the economy, telling lawmakers that the outlook remains strong and inflation, while subdued, has been stable.
The vice chairman plays a critical support role for the central bank’s leader, and often heads special projects at the request of the chair. Along with the president of the New York Fed, who acts as the central bank’s eyes and ears on Wall Street, the deputy typically forms a key voting bloc with the chairman on both policy and strategy.
Clarida “is just what Jay needs,” said Timothy Adams, president of the Washington-based Institute of International Finance, referring to Powell by his nickname. “He’s well respected in the financial industry, well respected in academia and has got a team mentality.”
Since 2014, Clarida has led Pimco’s annual secular forum that brings in former policy makers and other high-powered outsiders to help the Newport Beach, California-based firm decide how to manage its $1.75 trillion in assets.
He was an early progenitor of the so-called “new neutral” concept championed by Pimco that argues that equilibrium global interest rates — ones that neither spur nor stifle economic growth — are significantly lower than they were in the past.
In a Dec. 13 Bloomberg Television interview, he reckoned that rate in the U.S. is now closer to 2 percent than to 3 percent. Fed policy makers, in contrast, peg the neutral rate at 2.8 percent, according to the median projection of officials in December.