United States President Donald Trump tapped Jerome Powell on Thursday to replace Janet Yellen as Chairperson of the Federal Reserve System (central banking system of the U.S.) when the latter's term ends in February, choosing a moderate member of the Fed’s board who has backed Ms Yellen’s cautious approach to interest rate hikes.
Mr. Powell, 64, is seen as a safe pick. His selection will likely assure investors hoping for continuity at the central bank. Some analysts see Mr. Powell, though, as more inclined than Ms. Yellen to ease financial regulations and possibly to favor a faster pace of rate increases.
Mr. Trump made the announcement in a Rose Garden ceremony with Mr. Powell standing beside him. He said Mr. Powell had earned the “respect and admiration of his colleagues” in his five years on the Fed’s board.
The President also praised Ms. Yellen, the first woman to lead the Fed, whom he decided not to nominate for a second term. He called her a “wonderful woman who has done a terrific job.” In a departure from previous announcements of new Fed chairs, she was not in attendance on Thursday.
Mr. Powell himself said it had been a privilege to serve under Ms. Yellen and her predecessor, Ben Bernanke, and said he’d do all he could to meet the Fed’s dual mandates of stable prices and maximum employment.
Sung Won Sohn, an economics professor at California State University—Channel Islands, suggested that the new chair would likely deviate little from Ms. Yellen’s policy leadership if the economy performs as expected.
“Mr. Powell could be considered a clone of Janet Yellen in a positive sense,” Mr. Sohn said. “He will continue the same cautious, gradualist policy in setting interest rates that she did.”
If confirmed by the Senate, Mr. Powell would become chairman when Ms. Yellen’s term ends on Fenruary 3.
Unlike the past three Fed leaders, Mr. Powell lacks a Ph.D. in economics and spent years working at investment firms. In choosing him, Mr. Trump decided against offering another term to Ms. Yellen despite widespread approval for her performance. The Yellen Fed and its go-slow approach to rate hikes have been credited with helping nurture the continued recovery from the Great Recession. Now, she will become the first Fed leader in decades not to be offered a second term after completing a first.
Conservative Republicans, who have complained that the Fed has grown too independently powerful, praised the selection. Senate Republican Leader Mitch McConnell pledged quick consideration of Mr. Powell’s nomination and said the nation needs “a more transparent and accountable Fed.”
Democrats expressed discontent that Ms. Yellen hadn’t been given a second term. “Janet Yellen has been one of the most successful Fed chairs in history, and she deserved to be re—nominated,” said Sen. Elizabeth Warren of Massachusetts.
Mr. Trump acknowledged in a recent TV interview that his decision on a Fed chair might have less to do with Ms. Yellen’s performance than with wanting to impose his own stamp on the Fed.
