[Asia Economy New York=Special Correspondent Joselgina] Austin Goolsbee, president of the Chicago Federal Reserve Bank and the architect of 'Obamanomics,' is being considered as the successor to U.S. Federal Reserve (Fed) Vice Chair Lael Brainard, who will soon move to the White House.
The Wall Street Journal (WSJ) reported on the 15th (local time) that the White House is reviewing a plan to nominate Goolsbee as the new Fed Vice Chair. Goolsbee, 53, served as the chair of the White House Council of Economic Advisers during the Barack Obama administration from 2010 to 2011 and was known as the 'Obama economic teacher' and 'architect of Obamanomics.' Before assuming the presidency of the Chicago Fed in January this year, he was a professor of economics at the University of Chicago Booth School of Business.
Current Vice Chair Brainard will resign from the Fed on the 20th and move to the White House as chair of the National Economic Council (NEC). As the Fed's second-in-command, the Vice Chair acts as a policy deputy to Fed Chair Jerome Powell and is one of the key figures leading the agenda during interest rate decision meetings.
WSJ reported that with the departure of Brainard, a prominent 'dove' (favoring monetary easing), the voices of hawks within the Fed may become louder. Brainard publicly supported interest rate hikes to curb high inflation but internally advocated caution against aggressive rate increases, warning of risks from excessive tightening. WSJ described Brainard as "one of the most influential doves."
Goolsbee, who has been mentioned as a successor, has not publicly expressed his views on monetary policy since being appointed Chicago Fed president last December. However, his past actions suggest he is considered a dove. In a November interview with Fox Business Network, he said it was too early to say whether inflation had peaked and noted, "The pace of decline may not be as fast as everyone expects." When asked about the terminal rate, he replied, "It entirely depends on inflation." In a June interview with CNBC last year, he mentioned that "aggressive tightening could cause stagflation."
WSJ added that if Goolsbee, who voted at the February FOMC, becomes Vice Chair, Loretta Mester, president of the Cleveland Fed, will serve as an FOMC member until a new Chicago Fed president is appointed.
However, if Goolsbee becomes Fed Vice Chair, there is a possibility of criticism from some progressives. This is because the Fed's top four positions, including Chair Powell, Vice Chair for Supervision Michael Barr, and policy advisor John Williams, president of the New York Fed, would all be held by white men.
Outside the Fed, economists Karen Dynan of Harvard University and Janice Eberly of Northwestern University, both white women who have previously worked at the Treasury and Fed, are mentioned as candidates. Inside the Fed, Lisa Cook, a Fed governor, and Susan Collins, president of the Boston Fed, are also considered candidates. Both women are Black.
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