Trump taps replacement for Yellen
Jerome Powell nominated to lead Fed.
President Trump nominated Federal Reserve Governor Jerome Powell as the next chairman of the central bank Thursday, tapping a Republican centrist who is likely to maintain the Fed’s strategy of gradual interest rate hikes but may be open to easing some regulations on banks.
He’s expected to take the helm when Yellen’s term ends in February, assuming he’s confirmed by the Senate.
“We need strong, sound and steady leadership at the Federal Reserve,” Trump said in a Rose Garden ceremony with Powell at his side. “(Powell) will provide exactly that.”
He added that Powell is a consensus builder, and because of his private sector experience, “He understands what it takes to drive American success.”
Powell, 64, who joined the Fed’s board of governors in 2012 to fill an unexpired term, would be the first Fed chairman in nearly 30 years not to have a Ph.D. in economics. He served as assistant secretary and undersecretary of the Treasury under President George H.W. Bush and was a partner at The Carlyle Group, an investment firm.
“I will do everything within my power to achieve the goals assigned to the Federal Reserve by the Congress: stable prices and maximum employment,” Powell said in a statement about his nomination.
Powell represents a middle-ground pick for Trump, who also considered current Democratic Fed Chair Janet Yellen as well as Stanford University economist John Taylor and former Fed governor Kevin Warsh. The latter two have supported sharper rate increases to ward off inflation and were favored by many Republicans in Congress.
Powell has consistently backed Yellen’s plan to lift rates slowly to head off a potential surge in inflation without disrupting an economic recovery that remains fragile by some measures. He also supports Yellen’s blueprint for gradually shrinking the Fed’s $4.5 trillion asset portfolio over the next several years, an initiative that’s expected to gradually push up long-term rates.
“In the years since the global financial crisis ended, our economy has made substantial progress toward full recovery,” Powell said in his statement on Thursday.
“We’ve been saying that Powell is the GOP’s version of Yellen,” says Tom Porcelli, chief U.S. economist of RBC Capital Markets.
While the two share similar views, interest rates could rise very slightly faster under Powell than Yellen, says Tim Duy, economics professor at University of Oregon author of the Fedwatch blog.