By Howard Schneider
PALO ALTO, California (Reuters) -The structure of the Federal Reserve’s Board of Governors, with members who cannot be fired over policy disputes and serve for periods staggered across presidential terms, has “stood the test of time” and should be preserved, Fed Governor Christopher Waller said on Friday.
Waller, citing earlier research of his own and others, said the U.S. central bank’s system provides electoral accountability by letting every U.S. president who serves a four-year term appoint some members of the seven-person Board of Governors, while the lengthy terms of up to 14 years allow objective, non-partisan policymaking.
That setup is more likely to produce better policy outcomes, with lower inflation and less economic volatility.
Economic stability is “enhanced by having a group of individuals set policy who could not be removed from office,” said Waller, a former research director at the St. Louis Fed who was appointed as a Fed governor during President Donald Trump’s first term in the White House.
“This structure is the one that we have in place today at the Federal Reserve,” Waller told a monetary policy conference at Stanford University’s Hoover Institution. “I would argue that it has stood the test of time, and I hope that it continues to be in place for years to come.”
His comments follow what seemed to be threats by Trump earlier this year to try to fire Fed Chair Jerome Powell, though the president has since backed down. The Fed is closely monitoring a case before the U.S. Supreme Court to see if Trump is allowed to fire officials at other independent agencies.
Waller did not comment on monetary policy or the economic outlook in his prepared remarks.
(Reporting by Howard Schneider; Editing by Paul Simao)
