Powell is Trump’s likely pick to lead the Fed
Jerome “Jay” Powell, a member of the Federal Reserve’s board, is U.S. President Donald Trump’s leading candidate to replace Janet Yellen as the head of the nation’s central bank, with an announcement planned for Thursday, according to senior administration officials.
One senior official said Monday that the announcement is planned for Thursday. Another said Powell is the president’s top choice for the job but stressed that the decision still isn’t final. The two officials spoke on condition of anonymity to discuss personnel matters that have yet to be announced.
Trump’s impending announcement of his choice to lead the Fed is overshadowing this week’s meeting of the central bank’s policy group, composed of its board members and regional bank presidents.
With no policy changes expected when the meeting ends Wednesday, investors are instead waiting to assess what Trump’s choice for Fed chair could mean for the direction of interest rates, and perhaps for the economy.
Trump said in an interview that aired Wednesday that his decision had come down to two or three candidates. At the time, the finalists were thought to be Powell, Yellen and John Taylor, a Stanford University economist. And on Friday, Trump sent out a video in which he declared that he had someone “very specific in mind” for the job, saying that person will do a “fantastic job.”
In Powell, Trump would be selecting a policymaker with a reputation as a moderate whose stance on interest rate increases would likely deviate little from Yellen’s cautious approach. Powell would, though, be expected to be marginally more favourable toward easing some of the stricter financial rules that were enacted after the 2008 financial crisis. Trump has complained that those rules have been too restrictive.
On Wednesday, when the Fed issues a statement after its meeting ends, it’s all but sure to keep rates unchanged. But it might issue a hint of what is widely expected: That it’s likely to raise rates modestly at its next meeting in December for the third time this year. Another rate hike would reflect the economy’s steady gains. It would also suggest that the Fed is confident that inflation will pick up and reach its two per cent target rate relatively soon.
“Yellen and many of her colleagues believe that stronger economic growth will lead to higher wages and then higher inflation,” said Sung Won Sohn, an economics professor at California State University’s Martin Smith School of Business.
Factors such as solid economic growth, along with a stock market setting record highs, are thought to have put the Fed on a path to raise rates modestly later this year.