WASHINGTON (AFP) – Jerome “Jay” Powell, the Republican former investment banker tapped by President Donald Trump to lead the US Federal Reserve, will take the reins of monetary policy starting today.
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Perhaps the wealthiest Fed chair ever, Powell – who turns 65 on Sunday – succeeds Janet Yellen, who ends the first and only term held by a woman.
He takes over at a remarkably quiet time following a decade of economic turmoil that forced the central bank into uncharted policy waters to try to recover from the global financial crisis.
Nevertheless, Mr Powell, one of the rare non-economists to fill the role, could soon face difficult policy decisions that will put him at the centre of debate over how fast to raise interest rates.
Wages in January posted the biggest annual increase in nearly 10 years, with the growing US economy adding jobs at a solid pace, and while business and consumer confidence remains high just as a massive corporate tax reform is starting to take effect.
This comes at a time when all major global economies are growing simultaneously, an unusual and happy coincidence, but one that begins to raise concerns about when the recovery will end. And how.
“His biggest challenge will be leading the further calibration of interest rates when the US economy is late cycle amid a synchronized global economic upswing and fiscal stimulus is on its way,” Kathy Bostjancic of Oxford Economics told AFP.
As Ms Yellen departs, the only Fed chair in nearly 40 years not to be reappointed for a second term, she leaves an economy with unemployment at a 17-year low of 4.1 percent – half the rate when she became chair – quiet inflation and nearly four years of uninterrupted growth.
In addition, she steered the Fed out of its massive bond buying program and began the process of “normalization”, or reducing the size of investment holdings, without upsetting the skittish financial markets.
Ms Yellen prevailed in the debate to raise interest rates only gradually to ensure the economic recovery was on solid footing.