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Dec. 3, 2020, 1:19 p.m. EST

Chris Waller step outs out from Judy Shelton’s shadow and onto Fed board

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Greg Robb

Chris Waller, the director of research at the St. Louis Federal Reserve for over a decade, has been confirmed to be a governor on the central bank’s seven-member board in Washington, D.C.

Waller has seen his nomination overshadowed by that of fellow nominee Judy Shelton’s controversial candidacy for board membership.

Shelton, an adviser to Trump during his first presidential campaign in 2016, was controversial due to her longstanding support for the U.S. to return to some form of monetary policy based on the value of gold, causing to lose support from Republican senators.

Democrats were united against Shelton, charging she favored tight monetary policy when Democrats controlled the White House and easy money under the Trump administration. Her past writings, the Associated Press and others have noted , cast doubt on her support for central-bank independence from politics.

Waller was confirmed Thursday by a narrow margin.

Shelton’s nomination failed to advance last month and her chances of being confirmed have slipped away. Senate Majority Leader Mitch McConnell could still try to move the nomination before the end of the year.

Waller has served as the top adviser to St. Louis Fed President James Bullard. Appointed to the post in 2008, Bullard has not followed the pack at the central bank, continuing to do his own economic research and carving out unique positions that have often proved prescient.

For instance in 2016, Bullard switched to a more dovish monetary policy position than many of his colleagues, arguing that interest rates were going to stay low.

Waller “has been instrumental in helping shape Bullard’s view about the U.S. shifting into a low growth, low inflation and interest rate regime,” said Kathy Bostjanic, an economist at Oxford Economics.

Bullard’s dovish views won the favor of the Trump White House, which briefly considered him for a seat on the Fed board before settling on Waller.

Before joining the St. Louis Fed in 2009, Waller led the economics department at the University of Notre Dame.

“Chris Waller will be a great addition to the Board. His theoretical work has shown that money still matters to monetary policy and that policy makers should take it seriously in their models of the economy,” said David Beckworth, a monetary policy expert at the Mercatus Center at George Mason University.

Beckworth was referring to the St. Louis Fed’s tradition of being a regional bank where economists were “monetarists,” meaning they viewed growth in money supply as a key indicator of future inflation.

But over the last two decades, the importance of monetary aggregates has faded. Banks are subject to annual stress tests and their lending has to be backed by capital, explained Robert Brusca, chief economist at FAO Econoics

Monetarists are now “basically conservative economists” who tend to favor prudent levels of debt in the economy, Brusca said.

In a statement, Bullard said Waller exemplifies the St. Louis Fed’s “longstanding tradition of thought leadership in monetary policy and macroeconomic research.”

“Chris will be an excellent Fed governor and I look forward to our new working relationship as well as our continued friendship,” he said.

Stocks were higher on Thursday on hopes Congress will approve more another stimulus package before year-end, with the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.48% up 150 points in early afternoon trading.

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
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