Powell, a Fed governor since 2012 and now said to be chosen by Trump, is mostly seen as keeping the central bank on its current trajectory: a few interest-rate increases next year and a couple more sometime after that, with the benchmark rate peaking at about 2.8 percent.
"There was a slight bit of volatility around the time of the tax cut announcement", said Dan Hussey, senior market strategist at RJO Futures in Chicago, adding this caused gold prices to come off their highs.
Educated at Princeton University with a law degree from Georgetown, Powell, 64, known as Jay, spent many years in investment management - at Dillon Read and then at the Carlyle Group.
Powell openly expressed his concerns about the low productivity growth the U.S. economy is facing and worried that the central bank might lack sufficient room and tools to deal with another economic downturn in the current low interest rate environment. "How he will react when policy needs to pivot meaningfully is something investors will need to be attuned to during the confirmation process". He is well-liked inside the central bank and would be expected to bring a crucial ability to build consensus.
President Donald Trump nominated Jerome Powell for Federal Reserve chair. Though we would have preferred to see current Fed Chair Janet L. Yellen retained for a second term, Mr. Powell is a good choice - and by far the best non-Yellen option floated. "Today's decision to not reappoint Janet Yellen as Chair of the Federal Reserve is the wrong one, and was seemingly rooted in simple-minded partisanship", said Josh Bivens of the liberal-leaning think tank, the Economic Policy Institute. He is undoubtedly qualified for the role, so barring any tit for tat political games by Democrats, should be readily confirmed by the Senate.
Complicating matters even further for the former private-equity executive is that growth since the Great Recession ended in 2009 is only slowly closing an economic divide that's fueled the political populism that elected the man who picked him.
In April, he said that the regulations adopted after the global financial crisis have raised burden on smaller firms, although they helped the U.S. financial system to become stronger and more resilient. If it were, he would have followed in the footsteps of his predecessors and reappointed Yellen. In a statement after its latest policy meeting, the Fed left its key rate in a low range of 1 percent to 1.25 percent. Before leading the Fed, Yellen had served as vice chair since 2010, when she also began a term as board member that expires in 2024. First of all, not an economist by training, not that that's necessarily incredibly relevant, but more to the point, his policies are going to be extremely similar. In a way, it's a big change; Yellen is out a job as of next year, after all. And with historically low volatility in financial markets right now, Powell won't want to risk another "Taper Tantrum" that would mar the beginning of his tenure as Fed chair. She could stay on through January 2024, and there are growing voices for her to do so to help guide monetary policy. But the chairman's position is critical to achieving consensus.
The Fed has executed this delicate strategy without derailing the recovery or markets. We are long in the tooth in this expansion. On monetary policy rate hikes, be very similar, never voted against her. So it will be gentle rate hikes over a long period of time. He said the Fed was working to impose more limited restraints primarily on the largest banks.
Trump conducted his search for a Fed leader in an unusually open manner, with reporters kept apprised of Trump's string of interviews with the finalists.