But Wall Street commentary has coalesced around a consensus that there will be a change at the top of the central bank and that Powell represents the most continuity between regimes.
“[Powell is] the non-Yellen candidate who would offer the most continuity with respect to monetary policy,” said JP Morgan economist Michael Feroli. “In the past Powell’s monetary policy views had been judged as somewhat hawkish relative to Yellen. More recently it is hard to distinguish Powell’s comments on monetary policy from those of Yellen or other members of the Fed leadership.”
Feroli also notes that Powell is a Republican who previously served in the
George H.W. Bush administration where he was under secretary of the Treasury.
Nominating Powell, then, likely clears a path for his nomination being confirmed by the Senate amid a legislative environment that has so far accomplished little in the Trump era.
View photos Federal Reserve Board Governor Jerome Powell discusses financial regulation in Washington, U.S., October 3, 2017. REUTERS/Joshua Roberts
Now, some experts have argued that the top spot at the Fed won’t necessarily usher in a sweeping change to how the central bank conducts policy in the next year or so.
Rick Rieder, global chief investment officer of fixed income at BlackRock,
told Yahoo Finance earlier this month that, “Elected officials oftentimes come in and talk about the prior person who occupied that seat and change it dramatically.
“At the Fed, the staff drives a lot of the thinking and so, at least for the near-term, I think [the impact a new Chair will have on markets] is muted.”
But it isn’t just the top job at the Fed that remains open. Currently, the vice chair position as well as two other board vacancies, which would become three if Powell were elevated to Fed chair, are all open to nominations from the Trump adminsitration.
Trump, then, has a chance to remake the Fed in his own image — or the image of his advisors — with many thinking a Trump-shaped Fed will be more hawkish than the Yellen-Bernanke era.
“Even if Trump picks Powell, we wouldn’t be surprised to see the White House choosing hawkish nominees to fill the vacancies on the Fed Board,” writes Paul Ashworth, an economist at Capital Economics.
So markets will certainly react whenever Trump formally announces his nominee. But the slower, perhaps more subtle, change at the central bank in the coming months could have a bigger long-term impact on markets, interest rates, and the broader economy.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter >@MylesUdland
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Source : https://finance.yahoo.com/news/amazon-alphabet-gdp-need-know-week-ahead-162749555.html