Powell takes over as Fed chairman in midst of economic prosperity
WASHINGTON—It would seem like a pretty good time to take over as chairman of the Federal Reserve.
Jerome Powell has won Senate confirmation to head the U.S. central bank, inheriting an economy on a roll, a booming stock market and unemployment at a 17-year low.
He will succeed Janet Yellen, the first woman to serve as Fed chairman, when her term ends on Feb. 3. The position is considered the government’s most power economic job.
But while the immediate horizon appears clear, Powell faces the risk that today’s sturdy economy, low inflation and rising stock market could reverse course in the coming months or years, forcing him to come up with the right remedies.
One of the biggest threats could come from inflation, which over the past six years has been extremely low. Some forecasters, however, worry that the days of benign inflation readings could be coming to an end, especially if tight labor markets lead to accelerating wage gains.
There is also the concern that the stock market, which has been soaring to record highs, could get thrown into reverse if investors begin to worry about rising interest rates.
Yellen and other Fed
officials have emphasized that they hope to remain on a course of gradual rate hikes but they have warned that if inflation does start to accelerate, they may be forced to apply the brakes more forcefully by raising interest rates more quickly.
That is the economic landscape that Powell inherits following his confirmation for the chairman’s job by a Senate vote of 84-13 on Tuesday.
Powell, 64, has served for 5½ years on the Fed’s board. A lawyer and investment manager by training, he will be the first Fed leader in 40 years without an advanced degree in economics.