Bullard cites president's 'prerogative' on Fed appointments

MILWAUKEE (Reuters) - The possible appointment of presidential adviser Stephen Moore to the Federal Reserve would be unlikely to shift the U.S. central bank's policy because he would be only one voice among many, the head of the St. Louis Federal Reserve Bank, James Bullard, said on Thursday.

"It is a very large committee, 19 at full strength. So no one voice is going to be dominant in that environment," Bullard said. "There is a huge staff with lots and lots of analysis about where monetary policy should be, so that is informing the judgment as well."

President Donald Trump said he planned to nominate Moore, a Wall Street Journal columnist and think-tank analyst who has been harshly critical of Fed Chairman Jerome Powell, to an open seat on the central bank's board of governors.

Bullard said he was not familiar with Moore, but downplayed the risks the central bank might face from a clearly partisan appointee, or from Trump’s public criticism of Fed policy.

“I see a lot of continuity on monetary policy,” Bullard said in remarks to reporters after speaking at a monetary policy conference at the University of Wisconsin. “A president is free to choose who he wants if he thinks this would best represent his views. That is certainly his prerogative.”

There are currently five sitting members on the board of governors, with two open seats. Nominees to the board are subject to Senate approval. The 12 regional bank governors, hired by local boards of directors and not appointed by any elected official, also participate in policymaking on a rotating basis.

Trump last year repeatedly blasted the Fed for raising interest rates - which the Fed did four times in 2018 - saying the central bank’s actions would squelch an economic recovery Trump has taken credit for invigorating with a round of tax cuts and greater government spending.

Fed policymakers believe the rate hikes could actually help ensure the recovery extends longer by reducing the risk of too-fast inflation or dangerous imbalances in financial markets.

Even so, the Fed put further hikes on hold this year amid signs the economy may be slowing and in light of increased risks from overseas.

Moore, who advised Trump on the tax cut plan, was particularly vociferous in criticizing the quarter-point rate increases the Fed approved in September and December of last year, and recently said rates should now be cut by 50 basis points to offset them.

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Bullard, who had soured on additional rate increases earlier than many of his Fed colleagues, said it was premature to discuss any rate reduction, and felt, in fact, that the economy would likely rebound through the rest of this year after a recent spate of weakness.