Guessing game on Fed Chair

President Donald Trump is considering nominating Federal Reserve governor Jerome Powell and Stanford University economist John Taylor for the central bank's top two jobs, in an apparent bid to reassure markets and appease conservatives hungry for change.

  • Published 22.10.17
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Washington: President Donald Trump is considering nominating Federal Reserve governor Jerome Powell and Stanford University economist John Taylor for the central bank's top two jobs, in an apparent bid to reassure markets and appease conservatives hungry for change.

Under that scenario, either Powell or Taylor would take the reins from Fed Chair Janet Yellen when her term expires in early February, and the other would fill the vice chair position left vacant when Stanley Fischer retired this month.

"That is something that is under consideration, but he hasn't ruled out a number of options. He'll have an announcement on that soon, in the coming days," White House spokesperson Sarah Sanders told reporters on Friday.

Making Powell, a soft-spoken centrist who has supported Yellen's gradual approach to raising interest rates, the next Fed chief would provide the continuity in monetary policy that investors crave.

The addition of Taylor, who has backed an overhaul of the Fed and embraced a more rigid rule-oriented monetary policy, would be a feather in the cap of conservative Republicans who feel that monetary policy has been too loose under Yellen, who was named as Fed chair by Democratic President Barack Obama and has led the central bank since February 2014.

"I think Powell might be the safer pick insofar as we know what we're getting," said Michael Feroli, chief US economist at JP Morgan Chase.

"He's a guy who knows the Fed culture, how the committee operates, so for some of those soft skills we know he would be effective."

Powell has embraced the Fed monetary policy under Yellen, keeping the faith that a tighter job market will push wages higher and end a lengthy period of worryingly low inflation. Reuters

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