Waller is favorite for Fed chair among Trump team, Bloomberg News reports

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Waller met with Trump team, has not met with president: Bloomberg News

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Trump has demanded lower rates to reduce government borrowing costs

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Waller supports lower rates to help labor market

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By Devika Madhusudhanan Nair and Ann Saphir

Aug 7 (Reuters) - Federal Reserve Governor Christopher Waller is emerging as a top candidate to be the central bank's next chair, Bloomberg News reported on Thursday, citing people familiar with the matter.

Waller has met with members of President Donald Trump's team, who are impressed with him, though he has not met with the president, Bloomberg News reported. A Fed spokesperson had no comment.

"President Trump will continue to nominate the most competent and experienced individuals to deliver on his pledge to Make America Wealthy Again," White House spokesperson Kush Desai said. "Unless it comes from President Trump himself, however, any discussion about personnel decisions should be regarded as pure speculation."

Trump has repeatedly criticized Fed Chair Jerome Powell for not cutting interest rates, and while he has backed off threats to try to oust Powell before his term ends on May 15, has accelerated the search for a replacement.

Trump's pick will be closely scrutinized for a perceived ability to carry out monetary policy without ceding to political pressure, a quality that economists say is the bedrock of any central bank's inflation-fighting capabilities and what underpins the financial stability of the U.S. economy.

Powell has not said if he would break with tradition and stay on as Fed governor after his chair term ends, though analysts speculate that if he felt the Fed's independence was under threat he would do so to deny Trump the chance to fill another open Fed seat.

Waller, a PhD economist whose first speech after becoming Fed governor was about Fed independence, could allay those concerns.

Waller wanted an interest-rate cut at the Fed's July meeting, and dissented along with fellow Trump appointee Fed Vice Chair Michelle Bowman when the majority decided to leave short-term borrowing costs unchanged.

While Trump has called for lower rates in order to reduce the cost of government borrowing, Waller has built his case for lower rates on the argument that tariffs won't boost inflation and that a slowing labor market needs the support of easier policy. He has rejected the idea that rate-setting should have anything to do with making financing cheaper for the U.S. Treasury.

White House economic advisor Kevin Hassett and former Fed Governor Kevin Warsh, both of whom have also expressed support for cutting interest rates, remain under consideration for the Fed chair job as well, Bloomberg News said.

Trump on Wednesday said both men and an unnamed third person are candidates to fill a soon-to-be-open seat on the Fed board vacated by Governor Adriana Kugler, whose unexpired term runs through January. (Reporting by Devika Nair in Bengaluru; Additional reporting by Ann Saphir, Andrea Shalal; Editing by Andrea Ricci)