jakiro
Author: He Hao, Wall Street News
On Thursday, economist Marc Sumerlin confirmed himself as one of the Fed’s candidates for chairmanship, saying he was interested in the position and believed aggressive rate cuts were appropriate.David Zervos, a Wall Street veteran and chief market strategist at Jefferies, is also one of the candidates for the Federal Reserve chairman. On the same day, he expressed support for a significant rate cut.
On Wednesday, Trump said he might appoint the next Fed chairman slightly ahead of schedule, with the number of candidates narrowed to three or four.US Treasury Secretary Becent said on the same day that he plans to consider as many as 11 candidates.Zervos and BlackRock bond strategist Rick Rieder are among all candidates with a stronger market background than economics.
Sumerlin and Zervos’ interest rate stance is in line with U.S. President Trump in the competition to replace current Fed Chairman Powell.Trump has repeatedly urged the Fed to relax its interest rate policy and advocated a maximum rate cut of 3 percentage points, but the Federal Open Market Committee led by Powell has maintained the benchmark interest rate unchanged since the December 2024 cut.
Sumerlin: Cutting interest rates is an easy decision
Sumerlin served as deputy director of the National Economic Commission during the Bush administration and served as his economic adviser during the 2000 presidential campaign.He has participated in the formulation of Bush’s iconic Economic Growth and Tax Cut Coordination Act and the Sarbanes-Oxley Act, but he has no Fed-related work experience.In recent years, Sumerlin has run its own economic consulting firm and has maintained business dealings with Becente.
Sumerlin said on CNBC that it is an easy decision to cut the Fed’s key interest rates now.The current yield structure combines a weak labor market and stable inflation, telling us that it is entirely possible to cut interest rates by 50 basis points without any disruption.So in his opinion this was almost an obvious choice.
As for the nomination process, Sumerlin confirmed contacts from the White House last week.He said he was close friends with Finance Minister Besent, who played a leading role in finding the next president, and the two may have been discussing monetary policy every week:
I got a call last Wednesday saying there would be a list and I would be on the list.That’s everything I know right now.I’m waiting for further instructions to see what’s going on next.
Sumerlin said that as long as certain conditions are met, he will be interested in accepting the nomination:
I think if it is the chairman of the Federal Reserve, it is a key mission related to the world.You have to be willing to do it.I’ve never seen a president.It will depend on whether we can agree on the same view.
Sumerlin stressed the importance of Fed independence, which has been questioned as Trump takes an unprecedented historical approach to criticizing Powell and other decision makers.Trump once called Powell a “loseman” and “stupid” and criticized the Federal Open Market Committee (FOMC) for being too complacent.
In response, Sumerlin said:
You must be mentally prepared to know that you should do your best to work for the American people every day when you walk into the office, and you will also face criticism and be prepared to deal with it.Ideally, you want to know that each other is in sync before entering the position.Synchronization is bidirectional, which will also be part of the discussion process.
Zervos: Don’t fear PPI data, decisively reduce interest rates
David Zervos said in an interview with CNBC that Fed officials should not be afraid of the upstream pressure on inflation shown by the July Producer Price Index (PPI).
Instead, he argued that the Fed should now decisively relax monetary policy to prevent a slowdown in the labor market and actually create one million more jobs.In the past three Fed meetings, Zervos has advocated a 50 basis point cut in the federal funds rate. He reiterated this position in this interview:
I still absolutely stick to this point of view now.I think there is a reasonable and very convincing logic that monetary policy is tight.Overall, I can’t see the reason why this PPI data will change this view.
“I think it would be very beneficial if there are more people familiar with the market and market-capable participation in monetary policy decisions,” Zervos said.
Regarding the overall rate cut, Zervos said: “I’m not sure I can support a 300 basis point cut, but I can certainly accept 200 basis points. If it’s really emphasized AI stories, technology stories, and the deflationary pressure we are accumulating from the supply side, I can also be convinced to support a lower level.”
Zervos said he was not afraid of Trump’s criticism of the Fed.”To do this job, you must fully understand that you will be involved in a political process. The goal is to build debate on facts and oriented towards the mission goals set by Congress to make the most advantageous decisions.”
