President Donald Trump’s official selection of Jerome Powell to head the Federal Reserve will likely cause few reverberations throughout the economy, thanks to Powell’s reputation as a steady financial dove.
“This appointment represents continuity, steadiness,” Dennis Lockhart, former president of the Atlanta Fed told FOX Business’ Liz Claman. “I think those views are very important in this role. It’s an outstanding appointment.”
At a White House announcement, Trump lauded Powell’s experience and called him a strong, committed and smart leader. Powell responded in kind in a statement, thanking the president for the opportunity and promising to focus on curbing any other economic collapses similar to the recession in 2008.
“While post-crisis improvements in regulation and supervision have helped us to achieve these gains, I will continue to work with my colleagues to ensure that the Federal Reserve remains vigilant and prepared to respond to changes in markets and evolving risks,” he said.
If confirmed by the Senate, Powell, a member of the Federal Reserve’s board of governors since 2012, will replace Janet Yellen as Fed chair in early February when her four-year term ends. In a statement, Yellen congratulated Powell on the nomination, adding that his “long and distinguished career has been marked by dedicated public service and seriousness of purpose.”
Yellen, who was appointed by President Barack Obama in 2014, was widely considered to be one of the five finalists for the position, along with Stanford University economics professor John Taylor, former Fed governor Kevin Warsh and National Economic Council Director Gary Cohn. Yellen was the first woman to hold the top position of the central bank.
While the nomination of a new Fed chair holds the possibility of market-moving ramifications, Powell’s dovish policies -- similar to those of Yellen’s -- are unlikely to cause any volatility in the economy. Despite that, a rate increase by the Fed is likely to occur in the near future to prevent inflation from increasing, Lockhart said. He added that while the chair is an important position, the central bank largely works as a committee.
“You can put way too much pressure and way too much emphasis on the Fed chair per se,” he said. “It is a committee process, I was a part of it for 10 years. The Fed chair leads the process, but it is a committee decision.”