Yellen to Leave Fed Board When New Central Bank Chief Takes Over -- 2nd Update

By David Harrison Features Dow Jones Newswires

Federal Reserve Chairwoman Janet Yellen said Monday she would resign as a member of the Fed's board of governors once her successor as chairman has been sworn in.

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Although Ms. Yellen's four-year term as chairwoman ends Feb. 3, 2018, her term on the Fed board doesn't expire until 2024. In the past, it has been customary for Fed chairmen to step down from the board once their time as Fed chief is up.

President Donald Trump has nominated Jerome Powell, now a Fed governor, to succeed Ms. Yellen.

Ms. Yellen, 71 years old, previously served as Fed vice chairwoman and as president of the San Francisco Fed before President Barack Obama nominated her to succeed Ben Bernanke. She first joined the Fed in 1977 as an economist studying international finance before leaving to pursue an academic career at the University of California at Berkeley.

In a resignation letter addressed to Mr. Trump, Ms. Yellen said she had been privileged to serve at the central bank over "three eventful decades."

During her time at the helm, Ms. Yellen helped the U.S. economy recover its strength following the 2008 recession. Since taking over, she has watched the unemployment rate drop from 6.7% in February 2014 to 4.1% today. The economic expansion has continued uninterrupted and now ranks as the third-longest expansion in U.S. history.

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In December 2015, Ms. Yellen guided the Fed to raise interest rates for the first time in nearly a decade, after holding them near zero for seven years. Officials have since raised rates three more times and could decide to raise them once more at their Dec. 12-13 meeting.

The Fed chief also helped kick off a yearslong process of shrinking the central bank's portfolio of bonds purchased during and after the recession to boost the economy.

"I am gratified that the financial system is much stronger than a decade ago, better able to withstand future bouts of instability and continue supporting the economic aspirations of American families and businesses, " Ms. Yellen said in her letter. "I am also gratified by the substantial improvement in the economy since the crisis."

Ms. Yellen noted the economy had created 17 million jobs over the past eight years and said the Fed's twin goals of a labor market running at full strength while inflation remains low and stable are close to being achieved.

Ms. Yellen said she would "do my utmost" to ease the transition to Mr. Powell.

It would have been unusual, but not unprecedented, for Ms. Yellen to remain on the board after stepping down as chairwoman. Marriner Eccles, who served as Fed chairman from 1934 to 1948, remained on the board for three years after President Harry Truman replaced him as chairman.

With Ms. Yellen's resignation, Mr. Trump will have the opportunity to nominate four additional members to the seven-person board of governors, including vice chairman. His first nominee, Randal Quarles, was sworn in last month as the Fed's vice chairman for supervision.

Harriet Torry and Nick Timiraos contributed to this article.

Write to David Harrison at david.harrison@wsj.com

(END) Dow Jones Newswires

November 20, 2017 15:29 ET (20:29 GMT)