By Robert Donachie
Federal Reserve Chairwoman Janet Yellen announced Monday that she will resign from her post as one of the Fed’s board of governors once President Donald Trump’s pick to replace her is sworn in, The Wall Street Journal reports.
“I am gratified that the financial system is much stronger than a decade ago, better able to withstand future bouts of instability and continue supporting the economic aspirations of American families and businesses,” the chairwoman wrote in a resignation letter to Trump Monday. “I am also gratified by the substantial improvement in the economy since the crisis.”
Yellen’s announcement deviates a bit from a long-standing precedent of Fed chairs stepping down from the board of governors once their terms have officially ended.
Trump nominated Jerome Powell in early November to become the next chair of the Federal Reserve, a move that would bypass Yellen’s second term as Fed chair, which doesn’t officially end until February 2018. Powell currently serves as on the Fed’s board of governors.
“He’s strong, he’s committed, he’s smart,” Trump said at the White House when he announced Powell was his choice to take over for Yellen. “I am confident that with Jay as a wise steward of the Federal Reserve, it will have the leadership it needs in the years to come.”
The president broke from precedent with his announcement. The past three Fed chairs were all reappointed by a president of a different party.
Yellen was the first Fed chair to raise interest rates in the wake of the 2007 Great Recession. Under Yellen’s watch, the Fed has raised the federal funds rate — the overnight rate on loans between banks — twice in 2017 and is expected to do so a third time in December.
Powell is expected to continue Yellen’s interest rate policies, but is highly expected to following Trump’s deregulatory push when it comes to regulating major banks and financial houses.