11/08/2017
The New FOMC Chair
As you may have read in newspapers recently, it was announced last week that Jerome Powell had been nominated by Trump for the next Chair of the Federal Open Market Committee (FOMC), replacing Janet Yellen. The FOMC – also known as the “Fed” – is responsible for setting the path of monetary policy and interest rates in the U.S., and a Chair must be chosen for a term every four years. The decision around the new Chair is made at the discretion of the President, though it must be approved by the Senate afterwards, and pending approval, Powell’s term will start on Feb 1, 2018.
Markets have taken this change in stride for a few reasons:
Jerome Powell is already at the Fed, so not only is he involved in the ongoing discussions around the U.S. economy, he’s also a voting member who has helped decide the path of rate hikes.
He has a similar approach to Yellen, is seen as similarly dovish and as a result is unlikely to raise rates too quickly or deviate much from the current path.
Powell has both a financial markets and a government background, with experience in the Treasury Department under President George H. W. Bush. He is seen as a candidate that could potentially help with deregulation in the financial industry.
