The US Senate has voted with a sizable majority of 84-13 to confirm Jerome Powell as the next chairman of the Federal Reserve. Powell, who has held a position on the board of governors since 2012, will take over from his predecessor, Janet Yellen, in early February.
In contrast to some more radical frontrunners for the job, Powell is a centrist with a record of adhering to his predecessor’s dovish approach
Powell will inherit an economy exhibiting strong economic growth, which currently stands at three percent, coupled with low inflation and a labour market where the number of jobless claims has recently reached a nearly 45-year low. However, he will face the delicate task of slowly unwinding the Fed’s $4.5trn balance sheet and deciding on the pace of rate rises as the economy heats up.
Powell’s nomination for the job by President Trump broke with a long-standing tradition of presidents sticking with the chairperson who was in place when they took office. In this sense, Powell’s appointment has been controversial, but in many ways the decision is a vote of continuity.
In contrast to some more radical frontrunners for the job, Powell is a centrist with a record of adhering to his predecessor’s dovish approach. With respect to rate rises over the coming years, he has signalled that he will continue to pursue the gradualist approach advocated by Yellen.
One issue where he may tread closer to the Trump line, however, is on banking regulation, given his recent expression of an appetite for picking apart aspects of the Fed’s supervision.
Trump’s desire to steer the central bank towards a more regulation-averse slant has also been reflected in his recent appointments and has been boosted by the resignation of Daniel Tarullo, who was a staunch defender of regulatory safeguards.