Mnuchin Gets His Man

Steven Mnuchin. The Treasury Secretary lobbied hard for Mr. Powell on grounds that he was more open to Administration influence than the other leading candidates. This may be unfair to Mr. Powell, but it does raise questions about Mr. Powell’s independence and capacity for the job.

 .. He has few enemies, but he has left barely a policy footprint. His speeches are notable for endorsing whatever official Fed policy was at the time. He’s never dissented at the Open Market Committee (FOMC), which can be seen as loyalty to the chairman or a lack of personal conviction. This is especially notable in a period when other governors and regional bank presidents opine on everything.
.. This suggests that Mr. Powell’s views reflect those of the monetary status quo under current Chair Janet Yellen, and perhaps this is what Messrs. Mnuchin and Trump want. But in that case Mr. Trump should have continued with Ms. Yellen, who at least has been in charge. Mr. Powell will have to establish his authority with the other FOMC Members and the Fed staff, which is dominated by economists with a monetary policy model that requires a firm hand to supersede.

One certainty is that the next four years will be more volatile, especially if growth accelerates, interest rates rise and as the Fed shrinks its balance sheet. Mr. Powell has some experience in domestic financial markets but not in international currency and emerging markets. The combination of Mr. Powell at the Fed and Mr. Mnuchin at Treasury isn’t exactly the financial equivalent of SEAL Team 6.