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Donald Trump nominates Jerome Powell as Federal Reserve chairman

US President Donald Trump has named Jerome Powell as the next head of the Federal Reserve when Janet Yellen steps down in February.

US President Donald Trump has named Jerome Powell as the next head of the Federal Reserve when Janet Yellen steps down in February. Photo: Getty

US President Donald Trump has tapped Federal Reserve governor Jerome “Jay” Powell to head the US central bank, promoting a soft-spoken centrist to replace Janet Yellen when her term expires in February 2018.

Mr Powell, appointed to the Federal Reserve Board of Governors in 2012 by then-president Barack Obama, emerged as Mr Trump’s choice from a five-person slate of possible nominees that included Ms Yellen as well as others who would have represented a sharp change in monetary policy.

In an announcement at the White House on Thursday, Mr Trump called Mr Powell a strong, committed and smart leader.

“He has proved to be a consensus builder for the sound monetary and financial policy that he believes in … based on his record I am confident that Jay has the wisdom and leadership to guide our economy,” Mr Trump said as the Federal Reserve nominee looked on.

The decision offers a bit of both worlds, allowing Mr Trump to select a new Fed chief while getting continuity with a Yellen-run central bank that has kept the economy and markets on an even keel.

Mr Powell, a 64-year-old lawyer and former investment banker, has backed Ms Yellen’s general direction on monetary policy and, in recent years, shared her concerns that weak inflation justified a continued cautious approach to raising interest rates.

In June, he laid out both a defence of the Fed’s gradualist path and a critique of those, including some of his competitors for the Fed’s top job, who argued that the central bank had increased the risk of high inflation and other problems.

Mr Trump on several occasions has said he would prefer rates to stay low, a position at odds with some of those who were on his short list for the Fed job, particularly Stanford University economist John Taylor and former Fed governor Kevin Warsh.

Top White House economic adviser Gary Cohn was also a contender.

Mr Powell has been a reliable supporter of the consensus forged by Ms Yellen on the policy-setting Federal Open Market Committee, and likely will be seen as a less risky choice with the economy growing solidly and US stock markets near record highs.

The Fed has raised rates twice this year and is widely expected to do so again next month.

“The (FOMC) has been patient in raising rates, and that patience has paid dividends,” Mr Powell said in his remarks to the Economic Club of New York in June.

“After a tumultuous decade, the economy is now close to full employment and price stability. The problems that some commentators predicted have not come to pass. Accommodative policy did not generate high inflation or excessive credit growth.”

But Mr Powell has gone further than his colleagues in calling to relax some of the stricter regulations imposed after the 2007-2009 financial crisis and recession, also one of Mr Trump’s goals.

Mr Powell can now pursue that end along with Mr Trump appointee Randal Quarles, the Fed’s new vice chair for supervision.

– AAP

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