Trump taps Powell to lead Federal Reserve
— President Donald Trump has chosen Jerome Powell to be the next chairman of the Federal Reserve, a congressional source and U.S. media said Wednesday.
White House officials refused to confirm Trump had finalized his decision to pick Powell, but a senior Capitol Hill source told AFP that congressional leadership “got a head’s up” about Powell’s nomination.
The Wall Street Journal reported earlier Wednesday that Powell, a Federal Reserve governor, was Trump’s pick to replace Janet Yellen at the helm of the central bank.
The paper quoted two people familiar with the matter as saying Trump spoke to Powell on Tuesday to inform him of the decision. If confirmed by the Senate, Powell would take over from Yellen when her four-year term as Fed chair expires in February.
Powell has already been through that confirmation process in order to become a member of the Fed’s board.
Yellen was a potential, though dark horse candidate, and earlier Wednesday Trump praised her as “excellent.” But he has made clear in all his appointments he wants to put his own stamp on policy.
The choice marks the first time since Jimmy Carter’s administration in the 1970s that a president has failed to reappoint the Fed chair named by his predecessor.
After months of public debate, analysts say Powell represented a middle-ground option for the presi- dent, who wanted to mark a departure from the Obama era, while markets prefer continuity and favored Yellen who has presided over an era of low inflation and steady economic growth.
An attorney by training who has voted with the majority of Fed members since his appointment by Barack Obama in 2012, Powell was seen as a centrist, unlikely to pursue steep rate hikes but probably more amenable to the Trump administra- tion’s deregulation agenda.
Economy growing at ‘solid pace’
With a possible change of leadership looming, the U.S. Federal Reserve on Wednesday upgraded its view of economic growth, and downplayed the impact of two summer hurricanes.
Overshadowed by President Donald Trump’s planned announcement Thursday of his pick to lead the cen- tral bank starting next year, the Fed stuck to the expected course, holding its benchmark lending rate unchanged at 1.0 to 1.25 percent.
But the closely-scrutinized statement following the two-day meeting on monetary policy offered a single word that markets read as a signal the expected rate hike in December is on track. Already seen as a near certainty, a December move would be the third increase this year, and only the fifth since the end of the global financial crisis, a move to head off inflation which remains a distant threat.
The Fed’s policy-setting Federal Open Market Committee upgraded its outlook by altering one word, saying economic activity has been rising at a “solid” rate, rather than “moderately” as it was described in September.
“In one line: Growth assessment upgraded; rates to rise next month,” Ian Shepherdson of Pantheon Macroeconomics said in an analysis, in an opinion shared by most economists.
Mickey Levy of Berenberg Capital Markets said the “clear upgrade” on growth “virtually locked in a rate hike at the December FOMC meeting.”
Downplaying hurricane impact
While the FOMC acknowledged the back-to-back summer hurricanes in the South — Harvey in Texas and Irma in Florida — will continue to have an impact on economic activity, employment and prices, those disruptions will be short-lived.
The statement said “past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term.”
Chris Low of FTN Financial described the Fed’s analysis: “Weakness is explained away by one offs. Strength is real. Never mind that the strength in this case was also hurricane related as an army of workers flocked to Houston for the post-Harvey cleanup.”