New Federal Reserve Chief and What it Means

As Janet Yellen’s term comes to an end, President Trump chooses Jerome Powell as the new Federal Reserve chief. The new chief could mean little change in monetary policy and a less aggressive approach to financial regulation. Economists are currently expecting the Fed to raise short-term interest rates next month and lift them three times next year and perhaps twice in 2019. The Fed may update those forecasts at their next scheduled meeting on December 12th, 2017.

Many say that the new Fed chief is qualified for the position. His credentials include a law, investment banking, working at the U.S. Treasury Department, and his role as a partner in a private-equity firm, and as a Fed governor since 2012.


“Jerome Powell has shown to be cautious and judicious in his approach to monetary tightening, similar to Janet Yellen,” said Keith Knutsson of Integrale Advisors.

If confirmed by the Senate, which is likely to happen, Powell would be the first Fed leader in 30 years not to have a Ph.D. in economics. However, this should not be much of a setback. Mr. Powell had a good understanding of financial markets from his time in the private sector, time at the Fed, and his role at the Treasury Department.

Despite healthy skepticism by economists, any change in regulatory direction is likely to be modest. The push toward deregulation would be limited to avoid financial market uncertainty. In recent public remarks, Mr. Powell has pointed to ways that new rules imposed since the financial crisis could be eased, but he has made clear he isn’t willing to discard of the post-crisis regulations entirely.