The White House notified current Fed Governor Jerome Powell on Wednesday that he will be the nominee, replacing current Fed Chair Janet Yellen, according to a congressional source and US media.
A senior Capitol Hill source told AFP that congressional leadership “got a heads up” about Powell’s nomination.
The 64-year-old Republican has echoed the administration’s views on deregulation but is not seen as likely to tighten interest rates too quickly — which Trump opposes.
Doing so will make Trump the first president in nearly 40 years not to keep the Fed chair appointed by the prior administration. Trump on Wednesday reiterated that he holds Yellen in high regard, calling her “excellent.”
The announcement caps a highly publicized selection process over weeks during which Trump built suspense using social media and television appearances to describe his deliberations.
“I think you will be extremely impressed by this person,” Trump told reporters on Wednesday.
Yellen has led the central bank since 2014 and steps down 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 ‘continuity candidate’ -Furthermore, though his administration has been engulfed in turmoil virtually from the start, Trump has repeatedly hailed the country’s smooth economic progress and Wall Street’s successive rallies — making the prospect of disrupting the status quo particularly fraught.
But Trump has also relished dismantling the political vestiges of the former Obama administration and told Fox News last month, “you like to make your own mark.”
Powell is a former investment banker with 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.
“Jerome Powell is the continuity candidate, at least as far as near-term monetary policy is concerned,” Ian Shepherdson of Pantheon Macroeconomics said a client briefing.
“We will not be changing our interest rate forecasts if Mr. Powell is the nominee.”
Other candidates interviewed for the position have included current senior White House economic advisory Gary Cohn, a former Goldman Sachs president, but Trump may be wary of losing Cohn just as Republicans enter a high-stakes effort to pass sweeping tax cuts.
Also on Trump’s list was former Fed Governor Kevin Warsh, a proponent of higher interest rates who might enjoy some support among conservatives, and Stanford Economist John Taylor, the famed proponent of a rule which would calculate interest rates based on set economic parameters.
But both candidates threatened to send unhappy ripples through markets that fear sharply higher interest rates. DM
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