YOU could forgive Janet Yellen, the chair of the Federal Reserve, for feeling peeved. With unemployment at just 4.2%, and inflation at 1.6%, she is close to achieving the Fed’s two goals of curbing joblessness and pinning price rises at 2%. Ms Yellen is a Democrat appointed by Barack Obama in 2014. The tenures of past three Fed chairs were all extended by presidents from the other party. Yet as we went to press, President Donald Trump was expected to nominate Jerome Powell, a Republican on the Fed’s board, to replace Ms Yellen.
If picked, Mr Powell—also an Obama appointee—would stand out from recent incumbents. He would be the first Fed chairman since William Miller, who left office in 1979, with no formal economics training; and, according to the Washington Post, the richest since the 1940s.
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Mr Powell, who is 64, is a lawyer-turned-banker. His first role in Washington was at the Treasury during the presidency of George Bush senior. He had responsibility for financial institutions and helped deal with the collapse of the Bank of New England, then the third-largest bank failure in American history.
On leaving government, Mr Powell joined the Carlyle Group, a private-equity firm, before starting his own business. From 2010 to 2012 he worked for the Bipartisan Policy Centre, a centrist think-tank. There, he made a name by warning Republicans about their threats not to raise the limit on government borrowing.
At the Fed, Mr Powell has occasionally sided with hawks. But recently, his views on monetary policy have hewed close to Ms Yellen’s. In June he stressed the need to tighten monetary policy only slowly. He also mounted a robust defence of the Fed’s loose monetary policy after the financial crisis. Mr Powell has, however, recently suggested that there is some room to improve the financial regulations imposed after the crisis.
Critics of the Fed’s recent monetary policy include rivals for the chairmanship, such as John Taylor, an economist at Stanford University. The question is whether Mr Trump might appoint hawks like Mr Taylor to other open seats on the Fed’s board, of which there are three, including that of vice-chair. One more slot would open should Ms Yellen resign from the board, as is normal but not required for departing chairs. The balance of the committee will give a clearer idea of how much a Powell Fed would differ from the Yellen one.
Source: economist
Jerome Powell is poised to be named chairman of the Fed