The Trump administration announced Jerome Powell as its choice for Federal Reserve Chair this afternoon. The following are some thoughts on what we could expect from a Powell appointment.
“Jerome Powell comes to the position with substantial experience as a member of the Federal Reserve Board of Governors. He has never dissented in his time on the Board. In terms of monetary policy, I think he will operate much like Ben Bernanke and Janet Yellen. He was once described as mildly "hawkish" and has been described more recently as mildly "dovish." I expect continuity with the Yellen years, for better or worse.
With his law and investment banking background, I worry that Powell could become a captive to the Fed Board staff, who can present economic views that Powell may have a hard time assessing. Notable academics like Bernanke and Yellen had the standing to push back on staff views, if they wanted to.
I think we’ll see a difference in regulatory policy. Powell has expressed skepticism about the regulatory expansion of finance during the Obama years. Dodd-Frank does give the regulatory agencies leeway in interpreting and implementing regulations.
I expect the Senate to confirm Powell. Hearings should be simple because he is already on the Fed Board; he is just getting a promotion. I do expect some left-leaning Senate Democrats to vote against him because of his investment banking background and his anti-regulation views. Centrist Democrats will likely vote for him, as his monetary views are similar to Yellen's.”
- Brian Horrigan, Chief Economist