President Donald Trump on Thursday nominated Federal Reserve Governor Jerome "Jay" Powell to lead the US central bank, saying the former investment banker has the wisdom and intelligence to guide the world's largest economy.
"He is strong. He's committed. He's smart," and a "consensus builder," Trump said of Powell during the ceremony in the White House Rose Garden.
"Based on his record I am confident that Jay has the wisdom and leadership to guide our economy through any challenges that our great economy may face."
Powell will require Senate confirmation, but he already went through that process when he became a member of the Fed's board of governors.
Trump's decision to replace the sitting Fed chair is something no first-term US president had done in 40 years, marking yet another break with convention.
The 64-year-old Powell, a Republican like Trump, had echoed the administration's views on bank deregulation but has supported the Yellen Fed's very gradual interest rate increases, which is consistent with Trump's desire to keep interest rates low.
Trump and Powell offered extensive praise for Yellen, who they said demonstrated judicious stewardship during the current recovery.
But Trump had said prior to Thursday's announcement he wanted to leave his own mark on the Fed.
Trump has repeatedly hailed the country's smooth economic progress and Wall Street's successive rallies, making the prospect of disrupting the status quo at the Fed particularly fraught.
Analysts say choosing Powell allows Trump to put his own imprimatur on the central bank with a minimum of disruption.
"Powell allows Trump to change the Fed leadership without changing the basic monetary policy strategy. That strategy has been largely successful," said University of Oregon economist Tim Duy.
Yellen has led the central bank since 2014 and will relinquish the leadership post just as the post-crisis US economic recovery has begun to crest, with falling unemployment, robust growth and low inflation, conditions that have won her praise in many quarters.
The question now is whether she will follow tradition and resign as a member of the Fed's board of governors, once her term as chair expires February 3. She could stay on through January 2024, and there are growing voices for her to do so to help guide monetary policy.
There currently are just four members serving on the seven-member Fed board, and if Yellen leaves Trump could appoint four more governors, offering the president the unprecedented chance to designate most of the central bank's membership.
Powell is the latest in a string of former investment bankers tapped by Trump for high-profile posts. He has a declared personal fortune ranging between about $20 million and $55 million after nearly a decade at the Washington-based private equity firm Carlyle Group.
Fellow Fed Governor Randal Quarles, a Trump appointee, is also a former Carlyle partner.
Representing another break with tradition, Powell is not a trained economist. Even so Terry Sheehan of Oxford Economics said he has received a working education and is "well qualified" to serve as Fed chair. But she warned he may have to defend the Fed's independence "in a hostile political environment."
Date created : 2017-11-02