Jerome Powell, President Donald Trump’s pick to lead the Federal Reserve, pledged to pursue the U.S. central bank’s goals of stable prices and maximum employment while keeping a watchful eye on financial sector risks.
“Inside the Federal Reserve, we understand that monetary policy decisions matter for American families and communities,” Powell said Thursday during a ceremony in the White House Rose Garden with Trump. “I strongly share that sense of mission and am committed to making decisions with objectivity, based on available evidence and in the longstanding tradition of monetary policy independence.”
His nomination to succeed Janet Yellen, whose term as Fed chair expires Feb. 3, is subject to Senate confirmation. Senator Mike Crapo, chairman of the Senate Banking Committee, separately said his goal was to have Powell confirmed by year-end.
Yellen said in a statement Powell's distinguished career has been marked by "dedicated public service and seriousness of purpose." She said she's confident in Powell's "deep commitment" to carrying out the mission of the Federal Reserve, which sets U.S. monetary policy. She added that she will work with Powell to ensure a smooth transition.
Powell, a former Treasury Department official who spent much of his career outside government in finance, said the economy has made substantial progress since the crisis.
“By many measures we’re close to full employment and inflation has gradually moved up towards our target,” he said, standing beside the president.
A Fed governor since 2012, Powell, 64, is seen by many as the candidate for continuity at the world’s most important central bank. He’s supported Yellen’s policy of only gradually raising interest rates in the face of robust jobs growth, and has supported only modest adjustments to the raft of banking regulation implemented in the wake of the 2008-09 financial crisis.
“Our financial system is without doubt far stronger and more resilient than it was before the crisis,” he said. “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.”
Powell and Trump each made a point of saluting Yellen, who inherited a fragile post-crisis economy in 2014 and guided it carefully through four years of steady, if unspectacular growth.
“We are grateful for her total commitment to public service,” Trump said.
On Yellen’s watch, the U.S. economy added about 9 million jobs as it recovered from the Great Recession, lowering unemployment to 4.2 percent from 6.6 percent, while inflation averaged 1.1 percent.
The ceremony took place just as House Republicans at the other end of Pennsylvania Avenue began unveiling plans for major changes to the U.S. tax laws, a package that will present Powell with his first policy test.
Economists will likely be divided over how the Fed should respond to the tax plan. Much will rest on whether Powell believes the package can lift non-inflationary growth by encouraging businesses to invest more in their operations. In that case, he may argue for no reaction in monetary policy.
If, however, he decides the plan will do little more than spur consumption in the short run, while adding to price pressures and the risk of asset bubbles, Powell may favor raising interest rates in response, on top of any hikes he feels are appropriate amid a tightening labor market.
Fed officials forecast raising rates again in December following hikes in March and June, quarterly projections they updated in September show, with three additional moves penciled in for 2018.
The U.S. economy expanded at an annual pace of 3.1 percent in the second quarter and 3 percent in the third, making for the best six-month performance since 2014.
Senior Trump administration officials, speaking on condition of anonymity, said the president called Powell on Tuesday to offer him the job, and phoned Yellen earlier Thursday to inform her of his decision. The same officials said the president didn’t discuss interest rates or where monetary policy should go with any of the candidates he interviewed for the Fed job.
Powell, they said, made the best overall impression on Trump, showing good judgment and a unique combination of government and private sector experience.
The president had no problem with the way Yellen had lead the central bank during her four-year term, they added, and she was on his short-list until a few days ago. Stanford economist John Taylor was the third person whom he kept in the mix until opting to pick Powell.
The officials said there would be no announcement this week on whom Trump would nominate as vice chair to Powell.