Why would Jerome Powell Fed nomination be good for the US Dollar

The US President Donald Trump is likely to pick Jerome Powell for the position of next Federal Reserve chairman this week with continuity being the most valuable feature of Powell’s nomination.

Jerome Powell is currently working as a Federal Reserve governor with 14-years long appointment ending in 2028. He is a republican, but he was appointed to Fed by democratic president Obama for supporting his views during the debt-ceiling crisis in 2011. Since 2012 he is serving in position of Fed governor being reappointed in 2014 together with Fed vice president Stanley Fisher and Fed governor Lael Brainard. Powell’s key advantage to John Taylor is that he is a Fed insider with the knowledge of processes and people forming the monetary policy decisions.

Since joining the Federal Reserve Board of Governors, Powell made only few public speeches on monetary policy and the statements mostly confirmed Yellen’s views. This is a strong argument in favor of continuity, with Fed en route to monetary policy normalization with the economic growth and employment at full capacity justifying the move even with subdued inflation.

Unlike Benjamin Bernanke and Janet Yellen, Jerome Powell lacks strong academic backround. Although there is a chance of his views being influenced by the professional staff at the Fed, on a monetary policy level he is likely to stick to the course set by Janet Yellen. And that confirms the strongest feature of Jerome Powell –the continuity.

The biggest area of difference is the financial sector regulation. While Yellen offered a rather skeptical outlook for generally pro-business and pro-Wall Street nominations of the White house, Jerome Powell, a former Wall Street banker, is unlikely to resist. 

With Jerome Powell getting the nomination for Fed chairman, Trump will have in place a Wall Street Fed chairman in line with his Wall Street Treasury secretary and Wall Street Council of Economic Advisers chairman, forming complete deregulatory trio and this is the reason why Wall Street keeps breaking all-time records and the US Dollar is back on the rise.