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Report: Trump to tap Fed's Powell as chair, replacing Yellen

| Wednesday, Nov. 1, 2017, 6:15 p.m.
Jerome Powell, governor of the Board of Governors of the Federal Reserve, arrives for a dinner during the Jackson Hole Economic Policy Symposium in Grand Teton National Park near Jackson, Wyo.
Jerome Powell, governor of the Board of Governors of the Federal Reserve, arrives for a dinner during the Jackson Hole Economic Policy Symposium in Grand Teton National Park near Jackson, Wyo.

President Trump plans to nominate Federal Reserve Gov. Jerome Powell to the top job at the U.S. central bank, the Wall Street Journal reported, citing a person familiar with the matter.

Trump, who has said he'll announce his pick Thursday, would be choosing a former private-equity executive who favors continuing gradual interest-rate increases and sympathizes with White House calls to ease financial regulations.

The president spoke with Powell on Tuesday, the Journal said, citing another person familiar with the matter. A Fed spokeswoman was not immediately available for comment. Powell declined to comment when approached by a reporter outside his Washington-area home.

"Markets should take a Powell announcement largely in stride, keeping financial conditions easy and providing little disruption to an economy that is experiencing solid growth," said Peter Hooper, an economist at Deutsche Bank.

If approved by the Senate, the 64-year-old former Carlyle Group LP managing director and ex-Treasury undersecretary would succeed Fed Chair Janet Yellen, who has raised borrowing costs four times starting in late 2015 and just begun scaling back the central bank's $4.5 trillion balance sheet.

A Republican appointed to the Fed in 2012 by President Obama, Powell has earned a reputation as a non-ideological and pragmatic policy maker. While he hasn't played a prominent public role in formulating and explaining monetary policy, he has generally backed Yellen's cautious approach to withdrawing stimulus.

"He's going to bring continuity to monetary policy," said John Silvia, chief economist at Wells Fargo Securities in Charlotte."I've long argued that of the people involved, he's probably the easiest confirmation — the Senate has confirmed him before. And he seems to be a fellow who knows what is going on."

Under Yellen, whose four-year term as chair expires Feb. 3, the Fed has overseen an economic expansion now in its ninth year and a fall in unemployment to a 16-year low. It would be up to Powell to keep that growth on track, under a president who has stated a preference for much faster gains in gross domestic product and continued low interest rates.

Meanwhile, Federal Reserve officials voted unanimously to leave interest rates unchanged while signaling they remain on track to hike once more this year.

Recent data indicate that "the labor market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions," the Federal Open Market Committee said in a statement Wednesday following a two-day meeting in Washington.

Officials gave no sign that their expectations for a third interest-rate increase this year have been derailed. The Fed repeated its assessment that while inflation may "remain somewhat below 2 percent in the near term," it's expected to stabilize around the central bank's 2 percent objective "over the medium term."

The statement is likely to reinforce expectations for a December hike. Pricing in federal funds futures contracts prior to the release implied an 85 percent probability of a quarter- point move next month, when Chair Janet Yellen is scheduled to hold her next press briefing.

All four rate hikes since late 2015 have come at gatherings that were accompanied by a press conference, which occur at alternating meetings.

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