If Republican presidential front-runner Donald Trump wins the White House, he is likely to quickly take steps to move the Federal Reserve in a hawkish direction, according to economists at Citi, reports Greg Robb.
"He fears that the Fed's protracted, low-interest rate stance is damaging the U.S. economy and fomenting asset market bubbles," and that policy actions have been too "pro-Obama," according to the Citi research note.
On his first day in office, Trump is likely to be able to put forward his own nominees for two existing vacancies on the Fed's seven-member board of governors.
President Barack Obama's two nominees for the vacant seats, Kathryn Dominguez and Allan Landon, remain in limbo.
Citi said that Trump does not necessarily go along with the more radical ideas among conservatives who want to disband the Fed. But he does favor greater oversight.
Since Trump does not seem to be familiar with Austrian school business cycle theory, it is unlikely he will seek out economists who would end the Fed manipulations. Trump nominees would most likely be just a bit more cautious Keynesians. Perhaps, Larry Kudlow or John Taylor.
But unless, Joe Salerno, Richard Ebeling, Murray Sabrin or Walter Block end up on the Fed, don't expect any substantive changes.
Further, Trump would have to wait some time to replace to key Fed officials, Fed Chair Janet Yellen and Vice Chairman Stanley Fischer. Their terms don't expire until 2018.