President Donald Trump on Thursday tapped Fed Governor Jerome Powell to become head of the U.S. central bank, promoting a soft-spoken centrist to replace Janet Yellen when her term expires in February 2018.
Powell, appointed to the Fed board in 2012 by then-President Barack Obama, emerged as Trump's choice from a five-person slate of possible nominees that included Yellen as well as others who would have represented a sharp change in monetary policy.
In an announcement at the White House, Trump called Powell a strong, committed and smart leader.
"He has proved to be a consensus builder for the sound monetary and financial policy that he believes in ... based on his record I am confident that Jay has the wisdom and leadership to guide our economy," Trump said as the Fed nominee looked on.
The decision, which ended an unusually public, months-long search, offers a bit of both worlds, allowing Trump to select a new Fed chief while getting continuity with a Yellen-run central bank that has kept the economy and markets on an even keel.
Powell, a 64-year-old lawyer and former investment banker, has backed Yellen's general direction on monetary policy and, in recent years, shared her concerns that weak inflation justified a continued cautious approach to raising interest rates.
In June, he laid out both a defense of the Fed's gradualist path and a critique of those, including some of his competitors for the Fed's top job, who argued that the central bank had increased the risk of high inflation and other problems.
Trump on several occasions has said he would prefer rates to stay low, a position at odds with some of those who were on his short list for the Fed job, particularly Stanford University economist John Taylor and former Fed Governor Kevin Warsh. Top White House economic adviser Gary Cohn also was a contender.
Commerzbank economist Bernd Weidensteiner said a Powell pick would mean Trump had chosen the "least controversial" person for the job. "Under his chairmanship, markets would expect business as usual – which they obviously like," he said.
The president has mulled his choices for Fed chair, a decision that is normally cloaked in secrecy, in an unusually public way, asking lawmakers and even a television news anchor to weigh in on whom they would pick.
Trump also considered Stanford University economist John Taylor, former Fed Governor Kevin Warsh, and White House economic adviser Gary Cohn.
Taylor and Warsh were both viewed as people who might raise interest rates faster than Yellen and Powell. Cohn appeared to fall out of favor after criticizing Trump's reaction to the violence in Charlottesville, Virginia, earlier this year.
Financial markets look set to greet Powell's appointment with a shrug. Investors are pricing in an interest rate increase in December and the Fed's current projections are for three more increases next year.
Powell is expected to pursue a policy of cautious deregulation of the financial sector, potentially freeing smaller banks from some of the rules imposed after the 2007-2008 financial crisis.
Powell, who has been a Federal Reserve board governor since 2012, played a key role in drafting new bank regulations after the crisis and will likely offer more continuity for Wall Street than other candidates, analysts said.