President Donald Trump has nominated Jerome Powell as the next chair of the Federal Reserve, replacing Janet Yellen.
“We need strong, sound and steady leadership at the United States Federal Reserve,” Trump said at the Rose Garden ceremony outside the White House, where he made the announcement Thursday. He said that Powell “will provide exactly that type of leadership.”
Powell, who will face a Senate confirmation hearing before taking on the role, has served as a member of the Fed’s board of governors since 2012. While he’s expected to stay the course set by Yellen when it comes to making monetary policy, investors should look for signs of how the new chair could react in a change of economic conditions, according to Steven Friedman, senior economist at BNP Paribas Asset Management.
“He’s been on the committee during a time of gradual expansion,” Friedman said by phone. “How he will react when policy needs to pivot meaningfully is something investors will need to be attuned to during the confirmation process.”
Before the Senate confirmed him as Fed governor in 2012, Powell was a visiting scholar at the Bipartisan Policy Center in Washington, and worked as a partner at the private equity firm Carlyle Group from 1997 to 2005, according to the Fed’s website. Powell also served as undersecretary of the treasury under President George H.W. Bush.
Yellen, who became Fed chair in 2014, is a longtime civil servant, having worked as an economist with the Fed’s board of governors as far back as 1977, the central bank’s website shows. Before leading the Fed, Yellen had served as vice chair since 2010, when she also began a term as board member that expires in 2024.
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It is unclear whether Yellen will step down from the Fed’s board of governors, though by law, she could continue to serve, says Friedman, who adds that four seats on the board still need to be filled by Trump.
“A key uncertainty is not so much the transition of Yellen to Powell, but the fact that there are so many appointments on the board that need to be filled,” Friedman said. “We don’t know if they’ll skew hawkish or dovish.”