Potential Fed nominee Judy Shelton wants a change in the way interest rates are set
Potential Federal Reserve nominee Judy Shelton thinks the central bank ought to pay more attention to financial markets when setting interest rates.
Already an economic advisor to President Donald Trump, Shelton has been mentioned frequently as a possible candidate for a Fed governor position. If she did get the nomination and was confirmed, Shelton said she'd bring a different perspective when it comes to how rates are set.
"What bothers me most about the way the Federal Reserve currently operates is more the mechanism," she said in an interview with The Wall Street Journal. "We can talk about whether rates should go up or down. I would like to see more market-determined rates."
The Fed has been criticized for using models like the Phillips curve to determine where rates should be. Trump has said rates are too high and has blamed the Fed for holding back economic growth. Markets also are pricing in a high likelihood of a rate cut before the end of the year, though central bank officials have been nearly unanimous in saying they're comfortable with current policy.
Shelton told the Journal that Trump's economic policies have boosted growth without causing inflation and that she's no longer uncomfortable with low rates and their potential for helping wealthy investors at the expense of retirees and Americans living on fixed incomes.
"Things have changed," she said.
A White House official said there aren't any nominations planned yet. Trump recently saw the withdrawal of two people he wanted to nominate, Stephen Moore and Herman Cain, following controversies.
Read the full Journal report here.