According to him, the combination of the current yield structure, labor market weakness, and stable inflation indicates the Fed could easily do a 50 basis point cut.
Marc Sumerlin, a potential successor to Federal Reserve Chair Jerome Powell, told CNBC he’s very interested in the job and believes the Fed could “easily” cut rates by half a percentage point.
Sumerlin, a former senior economist under President George W. Bush, said in the interview that the combination of the current yield structure, labor market weakness, and stable inflation “tells us that we could easily do a 50 basis point cut … without disrupting anything at all. So it seems like pretty much a no-brainer to me.”
His name was among the 11 candidates that the Trump administration is reportedly looking into to take over from Powell when the Fed chair’s term comes to an end next year. “I got a call last Wednesday that said there was going to be a list [and] I was going to be on it. That’s as much as I know right now,” Sumerlin told CNBC. “I’m waiting for more guidance on where we go from here.”
He added that he was close friends with Treasury Secretary Scott Bessent, noting that the two have been discussing monetary policy for over a decade. Sumerlin indicated that while he was excited about the possibility of becoming the next Fed chair, his taking on the role would depend on whether the President and he see “eye to eye.”
He also pointed to Trump’s constant criticism of Powell and stressed the importance of the Fed’s independence. “You have to go into it knowing that every day you’re going to walk in and just do the best job you can for the American people, and you’re going to get criticism and be prepared to deal with that,” Sumerlin said. “Ideally, you’d want to go in knowing that you’re in synch. In synch goes both ways, and that would be part of the process trying to figure it out.”
The list of candidates to take over for Powell also includes Jefferies Chief Market Strategist David Zervos, former Fed Governor Larry Lindsey, and Rick Rieder, chief investment officer for global fixed income at BlackRock.
U.S. markets were in the red during pre-market trade. The SPDR S&P 500 ETF (SPY) fell 0.44%, while Invesco QQQ Trust (QQQ) dipped 0.49%. Retail sentiment around the S&P 500 ETF and QQQ on Stocktwits was in the ‘neutral’ territory.
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