Fed Watchers React to News Powell Will Lead U.S. Central Bank

03 Nov 2017, 02:47 AM IST

(Bloomberg) -- Donald Trump will nominate Federal Reserve Governor Jerome Powell to succeed Janet Yellen as the 16th chair of the U.S. central bank, according to three people familiar with the decision. The president has said he will make an official announcement on Thursday.

Here’s what a number of Fed watchers had to say about the news:

“It’s a sound choice. He has experience within the Fed, and is unlikely to chart a substantially different course on monetary policy.”

“We can expect that Powell will work to right-size regulation.”

-Carl Tannenbaum, chief economist at Northern Trust Corp. and a former Chicago Fed official

“He represents a bit of the continuation of the status quo without being named Yellen. He’s relatively dovish-leaning on policy, but also willing to undertake some deregulation at the margin. He’s basically a perfect candidate for Trump.”

-Gennadiy Goldberg, interest-rate strategist at TD Securities

“The selection of Powell gives the markets some measure of policy continuity and gives Trump someone open to bank deregulation. Win/win as they say.”

-Steven Blitz, chief U.S. economist at TS Lombard

“Everybody in the markets is assuming he’s a Yellen clone in terms of monetary policy. He’s kept a relatively low profile and when he spoke about the economy or monetary policy he’s tended to give the company line. I don’t think you can take from that he’s just 100 percent consistent with what we’ve had out of Yellen over the last four years.”

-Stephen Stanley, chief economist at Amherst Pierpont Securities

“Powell’s appointment is a means of putting a Republican in the leadership position but a signal to keep policy in the easy, gradual tightening mode. This makes the remaining unfilled appointments even more interesting, since Janet [Yellen] will likely leave. This means that [Fed Governor Lael] Brainard is the only economist on the board -- and one that has been extremely dovish.”

-Robert Eisenbeis, Cumberland Advisors vice chairman and former Atlanta Fed research director

“I would think of him as a continuation rather than a regime change at the Fed.”

“He is very cautious in the way he approaches things, and if you think about what is going on right now in the economy, it’s probably a good thing to be cautious. The uncertainty around” inflation “is very high, and that’s really the central question for the Fed right now: have we hit the point where we are going to get some inflation, or not? And I think that argues for an equally cautious policy.”

-Ethan Harris, head of global economics research at Bank of America Merrill Lynch

“The President said he wanted to make his own mark, but he apparently chose an Obama appointee and Fed governor who is essentially made in the same mold as Yellen, except for some minor differences on bank regulation and Dodd-Frank reform. Why not just reappoint Yellen is our question?”

-Chris Rupkey, chief financial economist with Bank of Tokyo-Mitsubishi UFJ Ltd.

“Early on” Powell stuck “pretty close to the committee. Now when he give speeches, I think it does very much reflect his thinking.”

“Jay being on the center of the committee, it’s a reflection of his pretty deep understanding of the relevant issues. The center of the committee is a pretty well-considered place to be.”

-Seth Carpenter, chief U.S. economist at UBS Securities and formerly the deputy director for monetary affairs at the Fed

To contact the reporters on this story: Christopher Condon in Washington at ccondon4@bloomberg.net, Jeanna Smialek in Washington at jsmialek1@bloomberg.net, Steve Matthews in Atlanta at smatthews@bloomberg.net, Matthew Boesler in New York at mboesler1@bloomberg.net.

To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Alister Bull, Randall Woods