President Donald J. Trump is expected to nominate Jerome Powell, a member of the Federal Reserve Board of Governors, to replace current Fed Chair Janet Yellen. The choice, which requires confirmation by the U.S. Senate, is seen by analysts as a move that would be a departure from the current monetary policy at least in the mid-term.
“If Trump nominates Powell to replace Yellen it will imply continuity in the Federal Reserve’s interest rate and the balance sheet policy, at least for a time,” a team of analysts at the Nomura Group said in a note Sunday. “As a governor, Powell has consistently supported policies proposed by Chairs [Ben] Bernanke and Yellen.”
Unlike Yellen, who spent most of her career in academia and government, Mr. Powell spent far more time in the private sector working at investment and banking outfits. He served at the position since May 25, 2012, after he was nominated by Barack Obama. Mr. Powell also served as assistant secretary and undersecretary of the treasury under George H.W. Bush.
President Trump during an interview last week with Fox Business’ Lou Dobbs that he wanted to put his “own mark” on the U.S. central bank, and has a history of criticizing the loose monetary policy of the Obama Administration. While a lite-version of that easy printed-money policy has continued and will in the short-term, analysts say nominating Mr. Powell as the next Fed chair would eventually spell the end to it.
“Over time, a transition from Yellen to Powell will likely move the center of gravity of the FOMC away from its recent interventionist inclinations,” the Nomura analysts said. “Of course, the president’s other appointments to the Federal Reserve Board will be important in this context as well.”
Analysts do not expect his nomination to result in a quicker pace of interest rate hikes.