President Donald J. Trump announced the nomination of Jerome Powell to be Chairman of the Board of Governors of the Federal Reserve System | November 2, 2017 (Official White House Photo by Andrea Hanks)
Jay Powell is the new chairman of the Federal Reserve. Janet Yellen’s term was marked mostly by her continuance of Ben Bernanke’s policies. Now, will Powell be a steady-as-she-goes chairman who continues the plan of rate normalization set in place by Bernanke/Yellen? Or will he chart his own course, either ratcheting rates up faster than expected to fight any potential inflation, or putting the pedal to the metal by lowering rates again to combat any drop in asset prices? The FT’s Sam Fleming discusses Powell’s future:
Jay Powell received a brutish welcome from the stock market on his first day as Federal Reserve chairman, but the equity sell-off that spread across the world is unlikely on its own to force him to chart a new course on monetary policy.
While a sustained rout would start damaging business and consumer sentiment as wealth is depressed, the S&P 500 index remains at levels seen as recently as December.
A markets barometer from Goldman Sachs shows that financial conditions at Monday’s close were still nearly 170 basis points looser than they were when the Fed first lifted rates at the end of 2015, suggesting that markets are continuing to support growth.
Traders pared back their bets on a rate rise in March after the stock market slumped on Monday, putting the chances of a move at 69 per cent, according to CME Group’s analysis.
But analysts stressed that US economic prospects remain sufficiently buoyant to keep the Fed on track for three rate rises this year, which was the median forecast from Fed policymakers published in December.
Read more here.
What priorities will Jerome Powell bring to the Federal Reserve?
Jeremy Jones, CFA
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