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[The Economist] Federal ReserveJerome Powell will be the next Fed chair

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Federal ReserveJerome Powell will be the next Fed chair

America's next central-bank chief is expected to stay the course on monetary policy

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Nov 2nd 2017


THE wait is over. On November 2nd Donald Trump announced that he will nominate Jerome Powell, a former investment banker and current Federal Reserve governor, as the next chairman of America’s central bank. Although Mr Powell’s academic background is unusual for a central-bank chief—he was trained as a lawyer and not as an economist—he is considered to be a fairly orthodox pick overall. His views on monetary policy, for instance, appear similar to those of the current Fed chair, Janet Yellen. What sets him apart from Ms Yellen, and perhaps what made him an appealing candidate to Mr Trump, are his more market-oriented views on financial regulation. For example, he has argued in the past that the “Volcker rule”, which was designed to prevent banks from engaging in certain kinds of risky trading activities, was too burdensome for banks, because it hampered their ability to hedge away risk.

Even though there is nothing unusual about the president’s choice, the fact that Mr Trump has declined to reappoint Ms Yellen represents a break with history. Ms Yellen has been regarded as an effective central-bank chief, and has presided over a period of both falling unemployment and unusually low inflation. She will leave the post after just four years on the job, making her the shortest-tenured Fed chair since George William Miller, who lasted just a tumultuous 17 months before he left to become treasury secretary. In a recent interview with Fox Business, Mr Trump praised Ms Yellen’s performance as Fed chair, but expressed a desire to make his own mark.

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