U.S. President Donald Trump announced his intention to nominate Richard Clarida, a respected economist and Pacific Investment Management Co. global strategic adviser, as vice chairman of the Federal Reserve.
Trump also announced his intention to nominate Kansas State Bank Commissioner Michelle Bowman as Fed governor representing the interests of community banks, the White House said Monday. Both selections, which were first reported by the Wall Street Journal, are subject to confirmation by the U.S. Senate.
If confirmed, the 60-year-old Clarida would bring a mix of skills to the job of the central bank’s number two alongside Chairman Jerome Powell. These include knowledge of financial markets gained during more than a decade at asset manager Pimco, to insights into how Washington works from his time at the Treasury Department under President George W. Bush.
A long-time professor at Columbia University, he would replace Stanley Fischer, who stepped down as vice chairman in October.
Centrist and Pragmatic
“I would describe him as centrist and pragmatic,” said New York University professor Mark Gertler, who has co-written a number of research papers with Clarida. “He has a nice balance between understanding and contributing to what the academic literature has to say and very practical, real world knowledge.”
Clarida will join the Fed as it pursues a gradual series of interest rate hikes and a reduction in its bond holdings under the auspices of Powell, who took the helm of the U.S. central bank in February. Powell said in a speech earlier this month that the outlook for inflation and employment support further gradual interest-rate increases.
The vice chairman plays a critical support role for the central bank’s leader, and often heads special projects at the request of the chair. Along with the president of the New York Fed, who acts as the central bank’s eyes and ears on Wall Street, the deputy typically forms a key voting bloc with the chairman on both policy and strategy.
Clarida “is just what Jay needs,” said Timothy Adams, president of the Washington-based Institute of International Finance, referring to Powell by his nickname. “He’s well respected in the financial industry, well respected in academia and has got a team mentality.”
New Neutral
Since 2014, Clarida has led Pimco’s annual secular forum that brings in former policy makers and other high-powered outsiders to help the Newport Beach, California-based firm decide how to manage its $1.75 trillion in assets.
He was an early progenitor of the so-called “new neutral” concept championed by Pimco that argues that equilibrium global interest rates -- ones that neither spur nor stifle economic growth -- are significantly lower than they were in the past.