President Trump is expected to announce his pick for a new chair of the Federal Reserve today, and the choice may pique Janet Yellen fans but please financial markets.
As usual, Mr. Trump has eschewed traditional protocol in both the selection process and in the very act of choosing a new chair rather than maintaining the sitting chair, as most previous presidents have done. Rather than taking place behind closed doors, the selection process has been a markedly public one, in which Mr. Trump even openly solicited input from a group of Republican senators.
Though he could surprise us–President Trump is nothing if not unpredictable–Jerome Powell is expected to be the president’s pick. Powell is a lawyer, a highly successful investment manager, and a member of the Fed’s board. He is likely to maintain Yellen’s cautious approach to rates but may be more amenable to easing some of the tight financial regulations that were imposed after the 2008 financial crisis. This is good news for Wall Street, which has been chafing against what many believe to be overly burdensome–and costly–compliance requirements.
Mr. Trump has praised Ms. Yellen’s tenure at the Fed, but choosing a new Fed chair will continue his effort to make a clean, clear break from the Obama administration and its policies. Some may see the replacement of Yellen–the Fed’s first female chair–as a slap in the face to women, which won’t help the president’s reputation for sexism. But if Powell can help bolster the U.S. economy’s upward trend, perhaps it’s worth the price.