“Everything has been hyper-politicized and the Fed is no exception,” said Mark Spindel, who wrote a book with Ms. Binder on politics at and around the Fed. “Filling these positions with Trump officials only limits Biden’s options.”
The Fed’s Washington-based board members vote constantly on monetary policy, while most of the 12 regional bank presidents change over four seats. The Federal Reserve Bank of New York is the exception and holds a standing vote. The board members, known as governors, also vote on the rules that govern the country’s largest banks.
The setting of interest rates is usually not a partisan exercise, and political preferences are not neatly divided along ideological lines. Banking supervision tends to be more political, however, with Republicans preferring lighter supervision and Democrats calling for stricter rules.
Despite the drama, Mr Waller’s affirmation has been received as good news by many in the central banking community.
He is a seasoned economist who has worked in academia and most recently as director of research at the Federal Reserve Bank of St. Louis.
Mr. Waller’s research has covered topics such as central bank independence – “the key tool to ensure that a government does not abuse monetary policy” – and he has provided a rationale for keeping borrowing costs cheap when prices are slowly rising, like it has been the last few years. The Fed raises or lowers interest rates to slow or accelerate the economy in hopes of keeping inflation slow and stable while maximizing employment.
Prior to joining the Fed in 2009, Mr. Waller was a professor in the economics division of Notre Dame. He holds a PhD from Washington State University. It is not clear whether he will be installed at the Fed in time for the December 15-16 meeting of the central bank.
“He was an excellent director of research,” said Robert S. Kaplan, president of the Federal Reserve Bank of Dallas, of Mr. Waller, calling him an “excellent economist” with a “sharp mind.”