Jerome Powell's Fed could be very different than Janet Yellen's, but the Fed governor is expected to steer monetary policy much as she did but jump into deregulation in a way she would not.
Powell is expected to be nominated to head the Federal Reserve by President Donald Trump on Thursday as the successor to Yellen when her term ends in February. A lawyer and former undersecretary of the Treasury, he is considered a solid choice, and while not an economist, he is experienced at the Fed, having been appointed a governor in 2012.
Repeatedly described as boring by Wall Streeters, compared with economist John Taylor or former Fed Governor Kevin Warsh, Powell is expected to stay on a similar policy course as Yellen but could be proactive in dropping some regulations on the financial sector.
"He's boring, but he's to the point," said Ward McCarthy, chief financial economist at Jefferies. "You don't listen to him and scratch your head and wonder what he just said."
"I think he's a good candidate," McCarthy said. "His strength, I think, is really more in regulation and he has some great experience on that front, dating back to when he worked with Warren Buffett to try to prevent problems at Salomon Brothers from becoming systemic ... so he's very knowledgeable about financial markets and had a successful career at Carlyle Group."
The downside is that his experience is more on the market regulatory side than on monetary policy, McCarthy said. But to some in the markets, that could be a refreshing change — and a boost to financial stocks. Yellen stood by the reforms made since the 2008 financial crisis and had publicly cautioned against loosening regulation.
Analysts say the stock market should like Powell, and Treasury yields were more subdued after it became clear that Taylor or Warsh were not going to be named chair. In the stock market, "they see it as continuity, and the stock market is planning on low rates for long or even forever," said Diane Swonk, CEO of DS Economics. "I think that may be misplaced because of the economic conditions, and I actually think we're going to get four hikes next year."
Reference: CNBC
Read more: https://www.cnbc.com/
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