Federal Reserve vice chairman announces plans to resign in October
Federal
Reserve Vice Chairman Stanley Fischer is to resign next month for personal
reasons, leaving a fourth vacancy on the seven-member Fed governing board.
Fischer
is a widely respected economist who taught at MIT and was head of the Bank of
Israel for eight years.
His
unexpected departure adds to a leadership vacuum at the top of the Fed as it
navigates a difficult path. Fischer, 73, was a confidant of Fed Chair Janet L.
Yellen, whose term ends in February
The
U.S. central bank is slowly raising interest rates as the economy grows and
unemployment falls. Yet inflation remains below the Fed’s target, complicating
its course.
Fischer
has been a member of the Fed’s Board of Governors since May 2014. His term as
vice chairman was set to expire next June. In a letter to the Fed, he said his
resignation would occur on or around Oct. 13.
His
resignation will provide President Trump with another opportunity to reshape
the Fed. Trump has nominated Randal Quarles for one of the four vacancies, as
vice chairman for bank supervision.
Quarles’s
nomination is scheduled for a vote by the Senate Banking Committee on Thursday.
All nominations to the Board of Governors require Senate confirmation.
Diane
Swonk, chief economist at DS Economics and a longtime Fed watcher, said
Fischer’s resignation could make it more likely that the Trump administration
will renominate Yellen rather than naming a new Fed chair.
Congress
already faces a crowded agenda this fall: It needs to raise the country’s
borrowing limit, reach a budget agreement to keep the government operating and
take up complicated tax overhaul.
“It
would be easier to keep her around,” Swonk said of Yellen. “You’re talking
about a lot of turnover when uncertainty about Fed policy is already high.”
Trump
criticized Yellen’s low-interest rate policies during the presidential campaign
but has tempered his comments since the election.
Last
month in an interview, Trump said he was considering either renominating Yellen
for a second term as Fed chair or replacing her. One potential candidate was
Gary Cohn, a former top executive at Goldman Sachs who now leads Trump’s
National Economic Council.
Cohn
would be the first Fed chair over the past four decades who is not an
economist.
In the
interview with the Wall Street Journal, Trump said he had a “lot of respect”
for Yellen and would consider asking her to serve another term.
But he
also said he was considering other candidates.
Yellen
has said that she intends to serve out her term but has declined to say whether
she would consider serving another term.
Reports
earlier this year suggested that a leading candidate for one of the other
vacant slots is Marvin Goodfriend, an economics professor at Carnegie Mellon
University in Pittsburgh.
Goodfriend,
66, worked for more than 20 years at the Richmond Fed and is seen as a leading
hawkish voice on monetary policy. In congressional testimony in March,
Goodfriend endorsed a move being pushed by Republican lawmakers to require the
Fed to follow a rules-based approach to setting interest rate policy.
That
could make it harder for the Fed in the future to slice interest rates to
ultralow levels, as it did in 2008 and 2009, amid the financial crisis and
Great Recession.
Another
potential nominee for a board seat is Robert G. Jones, the chairman and chief
executive of Old National Bancorp.
The
bank is headquartered in Indiana, Vice President Pence’s home state.