Trump’s potential Fed pick thinks interest rates should be set differently
he Dalai Lama reacts after receiving the National Endowment for Democracy's Democracy Service Medal during a ceremony at the Library of Congress in Washington, February 19, 2010. Presenting the medal is the National Endowment for Democracy's President Carl Gershman and Vice Chairman Judy Shelton.Judy Shelton has emerged as a potential nominee to the Federal Reserve Board of Governors.
Shelton argues that the current method of paying interest on excess reserves — or extra money that banks store at the Fed — incentivizes holding funds over lending them.in an interview published Wednesday. "It's going to be very difficult to fine-tune short term policy rates using sales and purchases of long term securities," said Menzie Chinn, an economist at the University of Wisconsin at Madison.
Shelton, who did not respond to emails and calls requesting comment, was an adviser to Trump's presidential campaign in 2016 and served on the Treasury Department's landing team during his transition to the White House.
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