Why the Senate should reject Judy Shelton’s nomination to the Fed

FOR MUCH of the past decade the Federal Reserve has operated without all its seven governors. Presidents Barack Obama and Donald Trump have struggled to find nominees whom the Senate, which must approve appointments to the Fed, finds acceptable. On February 13th, after we went to press, Mr Trump’s latest candidates for the job—Judy Shelton and Christopher Waller—were due to appear before the Senate Banking Committee for a grilling. Mr Waller, head of research at the St Louis Fed, is a perfectly good candidate. Unfortunately Ms Shelton, a former think-tanker, adviser to Mr Trump and official at the European Bank for Reconstruction and Development, is not fit for the Fed. Whatever she says, the Senate should reject her nomination.

The problem with Ms Shelton is not her belief, shared by Mr Trump, that interest rates should be lower, nor her status as an outsider to the clubby world of central banking. Annoyingly for the experts, Mr Trump is probably right when he grumbles—as he frequently does—that the Fed has been too hawkish during his presidency. For two decades the Fed has made mistakes because of groupthink. Just as in the 2000s central bankers and economists were blind to financial risks, so in the 2010s they have perennially overestimated the risk of inflation. Setting interest rates is a technical job, but more intellectual...