Donald Trump is on the verge of making a decision that will shape a big part of his economic legacy as president. Ramping up the suspense, he has said he will name the new chair of the US central bank “very shortly”.
Who he chooses for the world’s most powerful economics job will influence his success at turbo-charging growth. It comes at a key time for the bank as it moves away from emergency interest rates and the huge stimulus package sparked by the financial crisis.
The President is expected to make a decision before he flies to Asia for a major diplomatic trip on November 3. He has hinted there are three frontrunners from a five-person shortlist. So, who is in the running?
The current chair of the Federal Reserve Janet Yellen was appointed by President Barack Obama in 2014 and is the first woman to hold the position. Her term expires in February. While presidents have traditionally opted to keep the Federal Reserve chair who is in charge when they take office, analysts are unsure that Trump will stick with that tradition.
In particular, they point to Yellen’s perceived resistance to deregulating the financial sector as potentially putting her at odds with the White House. The Brooklyn-born economist is seen as “dovish” – someone in favour of gradually raising interest rates.
She has also been cautious about unsettling the markets as the Fed unwinds its measures from the financial crisis. Seen as a safe pair of hands by traders, Powell became the bookmakers’ favourite after reports last week suggested the president was “leaning towards” choosing him as chair.
A governor on the Federal Reserve board since 2012, Powell has never cast a dissenting vote on monetary policy. “He checks all the boxes,” says Omair Sharif, senior US economist at Societe Generale.
He is a Republican, offers stability, backs low interest rates, and is open to deregulation of the financial sector, Sharif explains. Trump mentioned Powell as one of three possible frontrunners in an interview aired on Fox on Monday, after reports over the weekend he could be appointed along with the next name on the shortlist, John Taylor. Janet Yellen was the third person Trump named. –BBC