The departure of Federal Reserve government Daniel Tarullo’s means that Donald Trump will be obtain a majority on the Fed’s board by the end of April, overturning Janet Yellen’s plans to hike interest rates and end QE.
There are two existing vacancies and already one Republican already on the board of seven governors, who set US interest rates.
Strategist Mark Grant told CNBC that Yellen was about to become irrelevant and that Trump would seek to fill the Fed’s board with governors who would keep interest rates low.
“I think what the Fed says at this point is, for all practical purposes, irrelevant, because Mr. Trump is going to be able to appoint three members of the Fed,” Grant said. “I think they’re going to be business people and the days of an academic, economist Fed are going to be over.”
Removing academics from the Fed’s board remains a point of contention, but Grant said the Trump administration is likely to do so with the economic landscape and policy goals in mind.
“I also believe that Trump and company, as I call them, know as they put in the infrastructure or the military expansion that there’s going to be a balance to the balance sheet, and … that the new people on the Fed are going to keep interest rates low,” Grant said.
“So all this talk of a three interest rate or four interest rate hike, in my opinion, is baloney.”