Front runner in Fed race - the good and not-so-good news

Washington

THE good news about the almost-certain nomination of Jerome Powell as the new Federal Reserve chair to replace Janet Yellen in February is that there will be a seamless transition of leadership and continuity in monetary policy, at least in the short term. Mr Powell has had a voice in determining policy for the past five years as a member of the Washington-based board of governors and has never dissented from the consensus statement. His imminent appointment has been widely reported and is based on authoritative briefings, though a formal announcement is not likely to be made until Thursday, after the two-day meeting of the Federal Open Market Committee (FOMC).

The less good news is that, in every respect except that he is a Republican, Mr Powell is less-qualified to be Fed chair under President Donald Trump than the woman he is replacing. His background is in law and investment banking, with some policy experience at the US Treasury, but he lacks the foundation in economics which has distinguished Fed chiefs. No amount of assistance from the staff can make up for that. He is more likely to be swayed by the staff than was Ms Yellen, a distinguished academic economist who had nearly two decades of hands-on experience with monetary policy as a top Fed official.