The Federal Reserve Bank of New York announced Monday that its leader William Dudley is planning to step down early and retire in the middle of next year.
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In a press release, the bank said Mr. Dudley is planning to leave ahead of the end of his current term's conclusion in January 2019 "to ensure that a successor is in place well before the end of his term."
Mr. Dudley's impending retirement had been a matter of speculation for central bank observers for a while, but many were caught off guard by the accelerated timetable. Mr. Dudley will be leaving the Fed at a time of considerable change for the institution.
President Donald Trump has nominated central bank governor Jerome Powell to replace current Chairwoman Janet Yellen early next year when her leadership term ends. Last month, Fed vice-chair Stanley Fischer resigned from the bank.
In a statement, Ms. Yellen said of Mr. Dudley that "the American economy is stronger and the financial system safer because of his many thoughtful contributions." Mr. Dudley was a close ally of Ms. Yellen, and she acknowledged as much, saying she appreciated his "wise counsel and warm friendship throughout the years of the financial crisis and its aftermath."
News of Mr. Dudley's impending retirement first broke over the weekend. Speculation now moves to who will take over a key leadership role, running the part of the central bank that deals directly with Wall Street and implements monetary policy.
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"I am extremely proud of the work we have done in New York, and as a System, from our efforts to help the nation navigate the financial crisis to beginning the process of normalizing the balance sheet to our work on reforming the culture of the financial services industry," Mr. Dudley said in a statement.
At an appearance later Monday before the Economic Club of New York, Mr. Dudley joked about why he moved up his exit date. "Gee, retiring to play golf in January? That doesn't make a lot of sense." He added that he was "sad" to leave the Fed.
Economists have generally been praiseworthy of Mr. Dudley's role on the monetary policy front, but the outgoing official has long faced criticism over his bank's oversight over the financial industry, where it is a major regulator.
In his appearance Monday, Mr. Dudley addressed central bank leadership flux and the fact that Mr. Powell breaks with recent decades' practice in not being a Fed chairman who is also an economist. Mr. Dudley described himself as a "big fan" of Mr. Powell and new Fed vice chairman for supervision Randall Quarles.
"The Fed will do just fine" with what's certain to be a "smooth transition," Mr. Dudley said. While a lot may be going on, he added "if you are going to have a transition, this is a heck of a lot better of a time to have a transition than in 2007."
Mr. Dudley sought to downplay the importance of any one person in determining Fed policy. He noted officials right now are very much on one page in terms of the outlook. He added that the Fed's staff is also very important to the functioning of the institution, and pointed to them as a bulwark of stability during the leadership change.
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(END) Dow Jones Newswires
November 06, 2017 14:15 ET (19:15 GMT)