Janet Yellen’s term as Federal Reserve Chair expires in February 2018, leading to intense speculation regarding who will be appointed to this powerful position in the coming year. President Trump has stated that he will make an announcement regarding his decision in the next two or three weeks; even so, the following individuals are considered to be the most likely candidates for the job.
Kevin Warsh
Kevin Warsh is widely considered to be the frontrunner for the job. He is the son in law of President Trump’s friend Ronald Lauder, and has extensive industry-related experience.
Warsh has worked at Morgan Stanley and for former President George W. Bush at the White House, and later served as Fed governor from 2006 to 2011. He is currently a fellow at the Hoover Institute.
The market has already shown its acceptance of the idea of Kevin Warsh leading the Fed. Treasury yields and bank stocks rose at the news of his possible nomination to the job. However, not everyone is happy with the idea. Left-leaning organizations have voiced their displeasure at the nomination due to the fact that Warsh is seen as being cozy with Wall Street.
The fact that Warsh will most likely raise interest rates faster than President Trump would like could put him out of the running. On the other hand, Warsh’s dedication to Trump’s pledge to reduce financial regulations could outweigh the president’s desire to maintain a weak dollar.
Jay Powell
Fed Governor Jay Powell is well-known in financial circles. He was a Carlyle Group partner from 1997 to 2005, served as both an Assistant Secretary and Undersecretary of the Treasury under former President George H.W. Bush and is currently a voting member of the Federal Open Market Committee.
The governor is considered to be a reputable candidate by members of both parties, which could put him at an advantage given the fact that there is not much time left to nominate a new chair.
Should Powell become the nominee, he is expected to run the Fed much like Janet Yellen did. He maintains a dovish point of view and would be unlikely to rock the boat, thus allowing market continuity to continue on for the next several years.
Janet Yellen
It would seem implausible at first glance that President Trump would select Janet Yellen for another term. However, the odds are real that this could very well be the case.
While the president denounced Yellen as being allied with Hillary Clinton, he has had nothing negative to say about her since taking office. What is more, Treasury Secretary Steven Mnuchin noted earlier this month that the president considered Mrs. Yellen to be obviously talented as was considering reappointing her to another four-year term.
Yellen recently met with President Trump and also had breakfast with Ivanka Trump, but it is unknown what came of either of these two meetings.
Others in the Running
While the three individuals mentioned above are the most likely candidates for the job, it is important to note that there are a few others in the running, and that the president may surprise us all with a nomination no-one was expecting.
White House Economic Advisor Gary Cohn is said to be still a candidate for the post, although the odds of him getting the nomination are lower than they were a few months ago due to his open criticism of the president’s Charlottesville response.
Other qualified individuals who are still under consideration include former Fed Governor Lawrence Lindsey, Standford economist John Taylor, Columbia University economist Glenn Hubbard and former BB&T CEO John Allison.
Trump’s appointment of a new FED Chair could have a dramatic impact on the economy. The Federal Reserve chair wields incredible power, and could either advance the president’s economic goals or slow progress in order to keep markets placid.
If Kevin Warsh is nominated to the job and then confirmed by the Senate, the central bank could be in for a great deal of change, which would not necessarily be a bad thing. If either Governor Powell or current FED Chair Janet Yellen is nominated, present policies would be continued and there would be no market disturbances.
Regards,
Ethan Warrick
Editor
Wealth Authority
