By Martin Crutsinger
WASHINGTON — Jerome “Jay” Powell, a member of the Federal Reserve’s board, is President Trump’s leading candidate to replace Janet Yellen as the head of the nation’s central bank, according to senior administration officials.
One senior official said Monday the announcement is planned for Thursday. Another said Powell is the president’s top choice for the job, but stressed that the decision still isn’t final. The two officials spoke on condition of anonymity to discuss personnel matters that have yet to be announced.
The decision over the Fed’s next leader is overshadowing this week’s meeting of the Federal Reserve’s policy meeting.
With no policy changes expected from the Fed when its meeting ends Wednesday, investors are instead awaiting the news of Trump’s choice for Fed chair – and what it could mean for the direction of interest rates, and perhaps for the economy.
Trump said last week in an interview his decision had come down to two or three candidates. The finalists are thought to be Powell; Yellen, the current Fed chair; and John Taylor, a Stanford University economist.
In Powell, Trump would be selecting a policymaker with a reputation as a moderate whose stance on interest rate increases would likely deviate little from Yellen’s cautious approach. Powell would, though, be expected to be marginally more favorable toward easing some of the stricter financial rules enacted after the 2008 financial crisis. Trump has complained those rules have been too restrictive.
Many conservative members of Congress have been pushing Trump to select Taylor. Taylor, one of the country’s leading academics in the area of Fed policy, would likely embrace a more “hawkish” approach – more inclined to raise rates to fight inflation than to keep rates low to support the job market. Taylor is the author of a widely cited policy rule that provides a mathematical formula for guiding rate decisions. By one version of the rule, rates would be at least double what they are now.
Some Fed watchers had speculated that Trump might try to install both Powell and Taylor — one as Fed chair, the other as vice chair, a spot that is also open.