In a move that could have major long term significance, the WSJ reports that the US President has nominated Randall Quarles as overseer of the country’s banking system.
The role was previously filled by Daniel Tarullo, who resigned in April. This move has been expected for months now and could mark the beginning of a period of Trump nominating to the Fed individuals who will help to ease banking regulations and work to keep the dollar weak.
While the direct implications for the retail forex industry in and outside of the US may be limited for now, they could grow if banks get easier regulatory conditions, which may spread to the wider financial sector.
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This is in alignment with what Trump would want to happen in the long term and it is clear that he is setting up the Fed in this direction. Quarles runs a private investment firm (Cynosure Group) and had also worked in the Treasury as an undersecretary during the administration of George W. Bush.
According to the WSJ, Quarles is known to favor a more mathematical approach to the determination of interest rates, as opposed to the discretion-based system which many experts believe to be in existence now. If confirmed, he would become the Fed Vice Chair of Supervision and it would help him to weigh in on monetary policy in Fed meetings. In this way, Trump would also seek to put his stamp on the decisions.
Further Appointments Likely
There are three vacancies on the Fed board and they could be filled quite soon with more Trump nominees. There is also an ongoing search for the next Fed Chair as the term of the current Chairwoman Yellen expires in February.
While it is possible that she could be re-nominated, there is a widespread belief that Trump will go for someone who buys into his vision of economic and monetary policy.
Quarles needs only a simple majority in the Senate for his nomination to go through, and so far it does not seem that he will have any problems achieving one. This should hopefully bring an end to the long and arduous search for replacements for Fed members, which get delayed as officials have to divest themselves of holdings in private entities before they assume office.