Powell Brings Continuity and Experience

President Donald Trump’s choice of Jerome Powell to lead the Federal Reserve is a very wise decision that will be welcomed by markets. It brings a highly respected, well-informed and experienced professional to the helm of the world’s most powerful central bank. And while Fed policy is essentially on automatic pilot for the next few months, Powell's Senate confirmation would need to be followed by a rounding out of the Fed’s leadership, including the nomination of a vice chair after the departure of Stanley Fischer, to ensure that the institution continues to function well at the intersection of economics, finance, policy and market technicals, both domestically and around the world.

If confirmed, which is likely, Powell would bring to the position a sense of continuity and predictability that is beneficial for the successful maintenance of the “beautiful normalization” process that has allowed the Fed to gently and gradually step back from unconventional monetary policies without destabilizing markets or derailing the pickup in U.S. and synchronized global growth. This process is likely to continue with an interest rate hike in December -- an outcome made more likely by the statement from this week’s Open Market Committee meetings -- and the implementation of the phased reduction in the balance sheet outlined earlier by the Fed.