TRUMP NOMINATES JEROME POWELL AS NEW FED CHAIR

Trump’s pick to replace Yellen is a Fed governor since 2012 who has sided with caution

A Federal Reserve governor since 2012, Jerome Powell will face an immediate test on whether to step up the pace of interest rate hikes. President Donald Trump has said hewants the rates to stay low.

President Donald Trump’s WASHINGTON choice for the next Federal Reserve chief, Jerome Powell, will face an immediate test as stronger economic growth exerts greater pressure on the central bank to step up the pace of interest rate hikes.

Trump has said hewants interest rates to stay low, and that presumably was an important consideration in the president’s decision, announced Thursday, to replace Janet Yellen with Powell, a Fed governor since 2012 who has closely aligned himself with the cautious policy moves and positions forged by Yellen. And like Yellen, whom he would succeed on Feb. 3 if confirmed by the Senate, Powell has shown he is in no hurry to raise rates.

But with the U. S. economy gathering steam and stocks surging to levels that have someworried, Powell soon could find himself in the uncomfortable position of having to build consensus around making more rapid rate increases, seldom a popular or easy thing to do. And some analysts think that job will be all the harder because Powell, unlike Fed chairs over the past four decades, is a not an economist. He is a lawyer and former investment banker.

Debate is alreadysharpening inside theFed as policymakers at one end press to hold off onlifting interest rateswhile thoseonthe other are keen to take more aggressive action to keep inflation in check. What’s more, the tax overhaul unveiled Thursday by Trump and congressionalRepublicans is likely to further push up interest rates if the cuts result in bigger federal deficits and debt, as expected.

“He’s got a very large challenge in that within the Fed, there’s a growing divide about the trajectory of rate hikes,” Diane Swonk, a Chicago economist and longtime Fed analyst, said of Powell. “He’s been straddling the middle. The question is: Can you straddle the middle and corral the cat?”

Trumphad narrowed his list of candidates to five people, including Yellen, whom he praised as “excellent” this week. In not choosing her, Trump broke a pattern of several decades in which Fed chairs were renominated by presidents of opposing parties. Trump had indicated that hewanted to pick