The Senate banking committee is set to approve Judy Shelton, a fierce critic of the Federal Reserve and advocate of the gold standard, for a seat on the board of the US central bank.
A spokesperson for John Kennedy, the Republican US senator from Louisiana who had been sceptical of Ms Shelton’s selection as a Fed governor, told the Financial Times he would be voting to advance her nomination when the panel convenes on Tuesday afternoon, solidifying Republican support for her selection.
With all Democrats on the committee saying they would oppose Ms Shelton’s nomination, unanimous Republican support was crucial for her chances. Mr Kennedy was considered the last remaining holdout.
Mr Kennedy’s spokesperson said the senator had “read her writings carefully, as he said he would do, and was satisfied with her independence”.
Ms Shelton was a former adviser to Donald Trump during the 2016 presidential campaign who has served as US representative on the board of the European Bank for Reconstruction and Development. Her appointment would allow the US president to place a loyalist at the heart of the US central bank as the Fed grapples with its response to the coronavirus pandemic and its economic fallout.
She told the Financial Times in an interview last year that if appointed to the Fed board she would ask “tough questions” about whether it should maintain its rate-setting powers.
“How can a dozen, slightly less than a dozen, people meeting eight times a year, decide what the cost of capital should be versus some kind of organically, market supply determined rate?” she said.
Ms Shelton’s nomination will be voted on by the Senate banking committee on Tuesday along with that of Christopher Waller, an economist at the St Louis Fed who has also been put forward for a seat on the Fed board.
If approved by the banking committee, Ms Shelton will still face a final hurdle — approval from the full Senate. It is unclear when Mitch McConnell, the Senate majority leader, would schedule a vote.
“These nominations are important because if Trump is re-elected, any sitting Fed governors that he chose in his first term would logically be among the top candidates to replace [Jay] Powell,” Ian Katz of Capital Alpha Partners wrote in a note this month.
Democrats have harshly criticised Republicans for moving ahead with Ms Shelton’s nomination.
“Let’s be clear — returning the US to a gold standard is a terrible idea, and it’s dangerous for our economy. But that’s what Judy Shelton has spent her career advocating for. She is not fit for the Federal Reserve Board,” Sherrod Brown, the top Democrat on the banking committee, wrote on Twitter last week.
Ms Shelton this month tweeted a clip of Christine Lagarde, the European Central Bank president, extolling the benefits of price stability.
“[Ms Lagarde] explains why price stability is important for families, businesses, and governments — because it enables them to plan and make decisions. That’s why it is also important to stipulate what ‘price stability’ means (and who gets to define it),” she said.