WASHINGTON - US President Donald Trump on Thursday tapped Federal Reserve Board Governor Jerome Powell to become head of the US central bank, breaking with precedent by denying Janet Yellen a second term but signaling a continuation of her cautious monetary policies.
Powell, 64, a lawyer and investment banker appointed to the Fed board in 2012 by then-President Barack Obama, emerged as Trump's choice from a slate of possible nominees that included Yellen and others who may have pursued a sharp policy shift.
In an announcement at the White House, Trump described the soft-spoken Powell as a smart and committed leader who would build on Yellen's achievements in steering the US economy after the recovery from the 2007-2009 financial crisis.
"If we are to sustain all this progress, our economy requires sound monetary policy and prudent oversight," Trump said as Powell looked on. "We need strong and steady leadership at the US Federal Reserve. ... He will provide exactly that."
Powell has worked alongside Yellen for the past five years, backing her direction on monetary policy and, in recent years, sharing her concerns that weak inflation justified a continued cautious approach to raising interest rates.
Yellen's four-year term as Fed chief ends in early February 2018. She will be the first US central bank chief not to be renominated to a second term since 1979.
Trump on Thursday lauded Yellen's stewardship but did not say why he decided to pass her over for another term. The Republican president said he was impressed by Powell's experience in the private-sector and "real-world perspective" to government.
"He understands what it takes for our economy to grow," Trump said.
Powell, who in the last 25 years has done a prototypical Washington circuit of government, private and think tank jobs, pledged to be attuned to emerging financial risks and the impact the Fed has on average Americans.
He will take over an economy that has been expanding for more than eight years and one that boasts an unemployment rate at more than a 16-1/2-year low.
"Monetary policy decisions matter for American families and communities. I strongly share that sense of mission and am committed to making decisions with objectivity and based on the best available evidence," Powell said in brief remarks after Trump's announcement.
His nomination now goes to the Republican-controlled Senate for confirmation.
"I'm encouraged by President Trump's choice," Senate Majority Leader Mitch McConnell said in a statement that pledged "timely" consideration of the nomination.
There was little apparent market reaction to Powell's nomination, which had been expected. Investors were largely focused on the release of details of a Republican plan to broadly change the US tax code.
By setting benchmark short-term interest rates, the Fed broadly influences borrowing and lending conditions in the economy. Since the crisis, the central bank has gained more power over the financial sector, while becoming more concerned about issues like income inequality.
Yellen, a Fed veteran who has served at all levels of the sprawling central bank system, said in a written statement that she would work with Powell "to ensure a smooth transition".
Reuters