Potential Fed pick Mohamed El-Erian comes with deep Wall Street background

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Mohamed El-Erian on tax reform's potential impact on economic growth

Allianz Chief Economic Advisor Mohamed El-Erian on tax reform, the Federal Reserve, ECB and the state of the markets.

Rumors are swirling that U.S. President Donald Trump is considering Mohamed El-Erian for Federal Reserve vice chair, the number 2 job at the central bank left vacant by Stanley Fischer’s resignation.

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According to the Wall Street Journal citing a person familiar with the matter, the White House is considering El-Erian as one of several candidates for the post.

This comes just weeks after current Fed. Gov Jerome Powell was nominated by Trump as the next chair, to take over from Janet Yellen in February. Powell was largely received as an “unexciting” appointment, someone that wouldn’t deviate far from Yellen’s monetary policies, although he may be slightly more amenable to relaxing regulations. Following his nomination, critics pointed out Powell’s lack of a formal economics training.

El-Erian has a doctorate degree in economics and is the former CEO of fixed income manager PIMCO and the current chief economic advisor at financial services company Allianz. He has spoken with FOX Business frequently about the U.S. Federal Reserve and its monetary policy, telling Maria Bartiromo in September that “The Fed intends to make unwinding [its balance sheet] as unexciting as possible,” and that its decision-making pace is like “watching paint dry.”

He does not think higher interest rates will slow the U.S. economy, because it has strong enough momentum. Back in July, El-Erian told FOX Business that the economy is capable of growing a lot more than 2% per year, but it needs the implementation of pro-growth policies including tax reform and deregulation.

If El-Erian becomes vice chair, he may push Powell to move forward with deregulation, and Powell may be open to this.

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The process for selecting the vice chair is being described as similar to the process used to select the Fed’s top dog. FOX Business was told that none of the candidates interviewed for the Fed chair role were ever asked about the vice chair position.

In addition to his economic and financial background, El-Erian is a regular columnist and has won several investment, management and philanthropic awards. He has served on various boards and committees, including the U.S. Treasury Borrowing Advisory Committee, and was chair of President Obama’s Global Development Council from 2012 to 2017.