Multiple outlets reported on Saturday that President Trump is likely to choose Jerome Powell as the next chair of the Federal Reserve, a decision the president has said he will announce this week.
Powell, a current member of the Federal Reserve Board of Governors appointed by President Obama, has been a mainstay on Trump’s shortlist for the position, along with Stanford professor John Taylor and current Chair Janet Yellen. Two other candidates who had been in the running, ardent Fed critic Kevin Warsh and National Economic Council director Gary Cohn, have reportedly been ruled out.
The widely respected Yellen was appointed by Obama in 2013, and her five-year term runs out in February 2018. Unlike many Obama holdovers, she has been the recipient of glowing praise from Trump, who has complimented her stewardship of the economy.
On Wednesday, he told Lou Dobbs that “In one way, I’d have to say, you’d like to make your own mark” on the Fed, but that Yellen is “terrific, we had a great talk, and we’re obviously doing very well together if you look at the markets.”
Trump could renominate Yellen; past presidents have stuck with their predecessor’s Fed choices, as in the case of Alan Greenspan and Ben Bernanke. But he appears likely to go in a different direction.
If Powell is nominated and confirmed by the Senate, he would be the first Fed chair since 1979 without a PhD in economics — his background is in law and investment banking. But his elevation would likely calm some observers who have been worried that the president might “Trumpify the Fed,” as Paul Krugman put it — that is, nominate someone grossly unqualified who would tear down the organization from the inside. Powell may be more enthusiastic about financial deregulation than Yellen, but he largely shares her moderate approach toward financial policy, and markets are likely to look favorably on such continuity. Powell also has the backing of Treasury Secretary Steve Mnuchin, who has helped lead the search for a nominee. Taylor, with an approach to interest rates that many economists view skeptically, is seen as a far riskier pick.
“If Trump believes Yellen’s approach is best for keeping market levels growing, he is going to seek a Fed chair who can carry on her mantle but under the Trump brand. The best non-Yellen Yellen is Powell,” Beacon Policy Advisors said in a report Friday morning.
Trump has, characteristically, made a spectacle out of the nomination process, posting an Instagram video on Friday in which he teased his upcoming announcement, declaring that “I have somebody very specific in mind. I think everybody will be very impressed.”