US: Who will lead the Fed? - Rabobank

Who will lead the US Fed will set the tone for the markets as President Donald Trump said that he is “very, very close” to announcing his nominee for chairman of the Fed, according to analysts at Rabobank.

Key Quotes

“Mr Trump is considering Stanford University economist John Taylor and Fed Governor Jerome Powell, although Fed Chair Janet Yellen could be reappointed. Reportedly, Trump’s advisors are trying to persuade him to choose between Taylor and Powell. The former is considered by the markets as a hawk and if appointed as Fed chairman it would provide the US dollar with a boost on the back of market speculations that the pace of monetary policy tightening may accelerate.”

“Replacing Yellen with Powell would imply that the Fed will continue to raise rates gradually. Another potential scenario is that Powell will become chairman with Taylor as vice-chairman. Tension continues to rise and there is no one better than Mr Trump to build it by posting vague tweets. Hold on to your seats.”