WASHINGTON: President Donald Trump is expected to nominate Jerome Powell as the next head of the Federal Reserve, putting his own stamp on the leadership of the US central bank while signalling continuity on monetary policy. Trump’s decision, scheduled for Thursday afternoon, concludes a months-long process in which he considered five finalists, including current Fed Chair Janet Yellen, before settling on Powell, who has served as a Fed governor since 2012. Powell’s name has been circulated as the top contender for over a week.
A source with knowledge of the process said no surprises were expected on Thursday, despite Trump’s reputation for weighing decisions up to the last minute and his praise on Wednesday of Yellen, who was nominated by Democratic president Barack Obama. Her term as Fed chair expires in February 2018; she is entitled to remain a Fed board governor until 2024.
“I think Janet Yellen is excellent,” Trump told reporters during a meeting with his cabinet after declaring his intention to announce his choice the next day. Asked if she was his pick, Trump said: “I didn’t say that.”
He predicted people would be “extremely impressed” with the nominee, who will require Senate confirmation.
Trump will announce his choice at 3 pm (1900 GMT) at the White House, according to his public schedule.
Powell, 64, has supported Yellen’s general direction in setting monetary policy, and in recent years has shared her concern that low inflation justified continuing with a cautious approach to raising interest rates.
Commerzbank economist Bernd Weidensteiner said a Powell pick would mean Trump had chosen the “least controversial” person for the job.
The president has mulled his choices for Fed chair, a decision that is normally cloaked in secrecy, in an unusually public way, asking lawmakers and even a television news anchor to weigh in on whom they would pick.
Trump also considered Stanford University economist John Taylor, former Fed Governor Kevin Warsh, and White House economic adviser Gary Cohn.
Meanwhile, the Federal Reserve kept interest rates unchanged on Wednesday and pointed to solid US economic growth and a strengthening labour market while playing down the impact of recent hurricanes, a sign it is on track to lift borrowing costs again in December.
Investors had all but ruled out a rate hike at the central bank’s policy meeting this week and attention has largely been focused on who will be in charge of monetary policy at the end of Fed Chair Janet Yellen’s first term in February 2018.
“The labour market has continued to strengthen and… economic activity has been rising at a solid rate despite hurricane-related disruptions,” the Fed’s rate-setting committee said in a statement after its unanimous policy decision.
In keeping with that encouraging tone, the central bank’s policymakers acknowledged that inflation remained soft but did not downgrade their assessment of pricing expectations.
US Treasury yields and short-term interest rate futures were little changed after the release of the statement, while federal fund futures put the odds of a December rate hike at about 98 per cent, according to CME Group’s FedWatch programme.