Fed Leadership Changes May Bring a GDP-Focused Agenda

Federal Reserve Vice Chair Stanley Fischer’s decision to resign in October with nine months remaining on his term could mean the potential is high for central-bank policy to be reshaped much sooner than many investors expected. Fischer’s departure will leave four of the seven seats on the Fed Board of Governors vacant, and that doesn’t include the one held by Chair Janet Yellen, whose term expires in February.

Given the list of names being floated as possible replacements for Yellen, which includes candidates with commercial banking backgrounds and economists whose academic work embodies policy rules and tax issues, it’s not hard to imagine that new leadership at the Fed could start to focus on nominal gross domestic product targets instead of full employment and inflation. That’s something the Trump administration has suggested would be desirable.