US Treasury Secretary Says New Fed Chair Likely to Be Announced Before Christmas—Criticizes Regional Fed Banks (Comprehensive)

(New York=Yonhap Infomax) Jin Woo Choi—Scott Besant, US Treasury Secretary, said on the 25th (local time) that there is a "very good chance" the next Federal Reserve (Fed) chair will be announced before Christmas.

In an interview with CNBC, Besant stated, "But whether it is before the Christmas holiday or in the New Year, that is entirely the President's prerogative."

He added, "Today marks the final interview of the second round," noting, "There are five very strong candidates. I was deeply impressed by all of them."

Besant also indicated that the criteria for the next Fed chair have evolved.

"The Fed has become a very complex institution," Besant explained. "It is no longer simply a place that sets the price of money; there are now highly complex interactions between monetary policy, the balance sheet, and regulatory policy."

"In our interviews, we emphasized how each candidate views these interactions, what they believe is the best path for the US economy, and how they would protect the American people and fulfill the dual mandate," he said.

When asked whether Kevin Hassett, Chairman of the White House National Economic Council (NEC), and former Fed Governor Kevin Warsh are leading candidates, Besant replied, "There is one interview left," and added, "It would not be appropriate to give any hints."

Besant also criticized the presidents of the regional Federal Reserve Banks.

"All the regional Fed presidents are giving too many redundant speeches. Why aren't they addressing issues that matter to the American people, rather than just the short-term outlook for the next meeting?" he said.

He continued, "Another interesting point is that regional Fed presidents were originally supposed to be from their respective regions, to weaken the influence of the New York Fed."

"But now, at least three, maybe four regional Feds have hired presidents from outside their regions," Besant pointed out. "They don't even live in those regions now—they commute from New York."

He reiterated, "In other words, New Yorkers are working in the regions and returning to New York on weekends. I don't think that's how the Fed was designed to operate."

Besant once again called for a Fed rate cut.

"Schumer's (Senate Democratic Leader Chuck Schumer) shutdown (temporary federal government closure) shaved at least 1.5 percentage points off growth," he said, expressing discomfort with the ongoing debate over rate cuts.

"We could be in a scenario similar to the 1990s," he noted. "Alan Greenspan (former Fed chair) was able to anticipate productivity gains and set the policy framework accordingly."

"We are seeing similar productivity now," Besant emphasized. "So I believe a combination of lower rates, higher growth, and higher productivity is possible."

jwchoi@yna.co.kr

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