President Trump on Thursday named Jerome Powell to be the next chair of the Federal Reserve, the first time in decades that a president hasn't reappointed a chief of the central bank for a second term.
If confirmed by the Senate, Powell, 64, will succeed Janet Yellen — the first woman to head the Fed — whose term expires in February. Powell, a current member of the Fed's board of governors, is expected to pursue policies largely in line with the gradual interest rate hikes of the Yellen-led Fed.
Trump said there's a need for "strong, sound and steady leadership at the Federal Reserve" and that Powell will "provide exactly that type of leadership."
Appearing with the president at the White House, Powell said he would work toward the Fed's goals of achieving stable prices and maximum employment.
Eric Lascelles, chief economist of RBC Global Asset Management, says Powell "has a similar monetary stance to the current chair [and] wouldn't raise rates very quickly."
Powell, a Republican, was nominated for his post as Fed governor in 2012 by President Barack Obama. Unlike recent Fed chairs, Powell is not a Ph.D. economist but a lawyer.
Prior to coming to the Fed, Powell was an investment banker. He was a partner at the highly successful, Washington-based private equity firm The Carlyle Group. As Fed chair, Powell would assume the position many describe as the second most powerful in the United States. That's because with its ability to influence interest rates the Fed holds great sway over the U.S. economy, job creation and the rate of inflation.
The Fed is also a major banking regulator and has responsibility for monitoring financial stability. During the financial crisis and the Great Recession, the Fed took extraordinary action, injecting trillions of dollars into the economy to stabilize the financial system. Its actions were widely credited with limiting the damage to the U.S. economy and avoiding a full-blown economic depression.
Yellen succeeded Ben Bernanke in 2014. Trump's decision not to reappoint her to a second term is a departure from the nonpartisan approach of U.S. presidents during the past nearly four decades.
Every president since Ronald Reagan who has had the opportunity to reappoint a Fed chair initially appointed by a president of the opposing party has done so. Reagan, a Republican, reappointed Paul Volcker, who was first appointed by Jimmy Carter, a Democrat. Bill Clinton, a Democrat, reappointed Alan Greenspan, who was initially appointed by Reagan. And Bernanke, who was first appointed by Republican George W. Bush, was reappointed by Barack Obama, a Democrat.
While it would be unusual for a former Fed chair, Yellen does have the option of remaining on the Federal Reserve Board. She would be filling out her 14-year governor's term, which ends in 2024. Trump has made several comments indicating he likes Yellen and seriously considered reappointing her. But in a recent interview with Fox Business News, Trump said: "In one way I have to say, you like to make your own mark ... which is maybe one of the things that she's got a little bit against her."
As a Fed governor, Powell has supported the policies of the Yellen Fed, which has only gradually raised official interest rates after leaving them near zero for seven years after the financial crisis.
"If the economy performs about as expected, I would view it as appropriate to continue to gradually raise rates," Powell said in a speech before the Economic Club of New York earlier this year. Most analysts expect him to move rates higher at about the same pace as Yellen.
On the bank regulatory front, Powell has been supportive of the Dodd-Frank reforms, though in recent remarks he has suggested there may be room for some streamlining. "Powell favors less regulatory burdens on banks" than Yellen, economist Mickey Levy of Berenberg Capital Markets says.
In remarks at a Fed-sponsored event in New York in early October, Powell said, "There is certainly a role for regulation." But, he added, "more regulation is not the best answer to every problem."
Powell is no stranger to Washington, D.C. He was born there in 1953 and has lived in the area most of his life. He was an undersecretary of the Treasury during the administration of President George H.W. Bush.