Trump nominates Jerome Powell to be Yellen's replacement at Federal Reserve

President Donald Trump has selected Federal Reserve board member Jerome Powell as the next chairman of the U.S. central bank, succeeding Janet Yellen.

64-year-old Powell seen as a safe option to signal continuity at the central bank

Two senior administration officials said Thursday that Federal Reserve board member Jerome Powell is President Donald Trump's choice to succeed Janet Yellen when her term as chair ends. (Andrew Harnik/Associated Press)

President Donald Trump has selected Federal Reserve board member Jerome Powell as the next chairman of the U.S. central bank, succeeding Janet Yellen.

Trump made the announcement Wednesday afternoon at a White House ceremony.

"He has proven to be a consensus builder," Trump said. "I am confident that [he] has the wisdom and leadership to guide our economy."

After a search that was more public than any before in the Fed's more than a century of history, Trump's choice of the 64-year-old Powell will likely be seen as a safe option who could signal continuity at the Fed.

Trump had considered renominating Yellen, the first woman to lead the central bank, for a second four-term term. Her term will end in February. But in the end, he opted for Powell, a Republican, over Yellen, a Democrat, explaining last week that doing so would allow him to put his own mark on the Fed.

If confirmed by the Senate, Powell would be the first Fed leader in nearly four decades to lack an advanced degree in economics. He has served on the Fed board since 2012 after a career as an investment manager, through which he amassed personal wealth in the tens of millions.

Trump had indicated that his final decision had come down to Powell, Yellen and John Taylor, a Stanford University economist. Earlier, the president had also considered Kevin Warsh, a former member of the Fed board, and Gary Cohn, his chief economic adviser.

Cautious on rate hikes?

Powell will likely be welcomed on Wall Street as someone who has supported the cautious stance toward interest rate hikes that Yellen has pursued in her nearly four years as chair and may be inclined to extend that approach if the economy performs as expected.

At the same time, no one is sure how closely Powell will keep to the Yellen model. He is, for example, thought to be more skeptical than Yellen of the tighter regulations that were enacted after the 2008 financial crisis. And depending on how the economy fares, Powell might lean somewhat more aggressively toward interest rate hikes than Yellen did.

How effectively he would lead the Fed's response to an unexpected economic crisis is unknown as well.

In Powell, Trump chose a middle ground between sticking with Yellen, who had been chosen for the Fed job by President Barack Obama, and Taylor, who was critical of the Fed's response to the 2008 financial crisis and would likely have pushed for raising rates more aggressively than Yellen's Fed has.

Decision breaks with tradition

In an interview last week discussing his decision, Trump told the Fox Business Network, "You like to make your own mark, which is maybe one of the things she's got a little bit against her, but I think she is terrific."

Trump's decision against nominating Yellen for a second four-year term makes her the first Fed leader since the end of the Second World War not to be offered a second term after completing a first. It also breaks the pattern of the past three Fed chairs, who were first nominated by the president of one party and then re-nominated by the president of the opposing party.

With files from CBC News