Fed vice chairman to step down next month

Federal Reserve Vice Chairman Stanley Fischer will resign next month for personal reasons, leaving a fourth vacancy on the seven-member Fed governing board.

Fischer is a widely-respected economist who taught at MIT and was head of the Bank of Israel for eight years. His unexpected departure adds to a leadership vacuum at the top of the Fed as it navigates a difficult path. Fischer, 73, was a close confidant of Fed Chair Janet Yellen, whose own term ends in February

The U.S. central bank is slowly raising interest rates as the economy grows and unemployment falls. Yet inflation remains below the Fed’s target, complicating its future course.

Fischer has been a member of the Fed’s Board of Governors since May 2014. His term as vice chairman was set to expire next June. In a letter to the Fed, he said his resignation would occur on or around Oct. 13.

His resignation will provide President Donald Trump with another opportunity to reshape the Fed. Trump has nominated Randal Quarles for one of the vacancies, as vice chairman for bank supervision.

Diane Swonk, chief economist at DS Economics and a longtime Fed watcher, said Fischer’s resignation could make it more likely that the Trump White House will simply renominate Yellen, rather than naming a new Fed chair.

Congress already faces a crowded agenda this fall: It needs to raise the country’s borrowing limit, reach a budget agreement to keep the government operating, and plans to take up complicated tax reform.

“It would be easier to keep her around,” Swonk said. “You’re talking about a lot of turnover when uncertainty about Fed policy is already high.”