And the Nomination for the New Head of the Federal Reserve Goes to … Powell!
Last week, President Trump voiced his nomination for who would replace current chair of the Federal Reserve, Janet Yellen. Trump’s decision? Jerome Powell. When Yellen’s term expires in February of 2018, Powell will take the seat … if approved by the Senate of course. Here’s a snapshot of what we know about Powell and what the talking heads are saying about the nomination:
- Instead of a rich background in academia and economics (like the majority of past Fed Chairs), Powell’s professional career has been in law and investment banking for the most part. He also worked in the U.S. Treasury in the early 90s under President George H. W. Bush. Since 2015, Powell has been on the Federal Reserve Board, which means if he's approved by the Senate, his current seat will be vacant.
- Continuity as opposed to swift change. Only hours after the President’s announcement, the financial media poured speculative content on the interwebs. The consensus was an agreement that Powell is likely to continue the monetary-policy strategy put in place by Yellen, and not disrupt the current momentum. One headline even read, "Powell: The Republican Yellen?"
- Part of “Making America Great Again” to President Trump is to re-invigorate economic opportunity. According to Trump during his announcement speech last week, the President believes Powell is the person to lead the U.S. independent central bank and further expand that economic opportunity.
- The choice to nominate Powell was expected. In the time directly following the announcement, the markets gradually ticked upward, rather than a radical change in one direction or the other.
- Since becoming a governor on the Federal Reserve Board in 2012, Powell has gone along with every Fed decision, including the four recent interest rate increases under Yellen.
- Powell is interested in rethinking some of the regulations and rules made under Dodd-Frank.
One Term (Not Two) for Yellen With this announcement it appears Yellen will not enjoy the comfort enjoyed by her recent predecessors: a second term. Her tenure was highly criticized by now-President Trump during his 2016 campaign. Trump viewed Yellen as part of Team Obama and openly criticized the way in which she chose to run the Fed. However, during his announcement last week, Trump said of his 10 months working with Yellen, “she is absolutely a spectacular person” (1). Yet, actions speak louder than words, as Trump’s nomination of Powell (if accepted by the Senate) would make Yellen the briefest serving Fed Chair since the 1970s.
- See here