Mario Blascak, PhD
Independent Analyst
The New York Federal Reserve President William Dudley retiring, the changes of personnel at the US monetary policy most prominent Board are mounting up, raising questions about what the future of monetary policy will be.
It is very likely that the US President Trump will try to shape the composition of Fed towards deregulation nominating more market-friendly candidates. At least this seems to be the case with nominations of Randal Quarles replacing Fed Governor Daniel Tarullo and Jerome Powell replacing Fed’s chair Janet Yellen.
The open posts include Fed vice-chairman Stanley Fisher’s position who retired earlier in September. Furthermore, there are changes at the regional level with the New York Federal Reserve President William Dudley retiring in mid-2018.
Tarullo vs Quarles
Fed Governor Daniel Tarullo who said he will resign earlier this year has been already replaced by Randal Quarles taking office as a member of the Board of Governors of the Federal Reserve System on October 13, 2017. Tarullo’s term of Fed Governor was set to expire on January 31, 2018.
Quarles was sworn in as Vice Chairman for Supervision with his position as a Vice Chairman for Supervision ending on October 13, 2021.
Quarles is a former investment banker and investor. Before joining Fed, he founded and managed Utah-based investment firm Cynosure Group and before that he was a partner at The Carlyle Group, a private equity firm based in Washington DC. With Quarles at the top position responsible for banking supervision, it is clear that this is Trump’s signature cry for less regulation.
Yellen’s case
Ever since running in the presidential campaign, Trump had made it clear that he opposes Janet Yellen’s policy in Fed. We already know that current Fed governor Jerome Powell was nominated by Trump to replace Yellen, whose term is expiring in February next year. With Jerome Powell in charge in Fed, the grip over the Wall Street with banking regulation is expected to loosen, unlike under Yellen.
Fisher’s replacements
A position of Stanley Fisher, Federal Reserve’s vice chairman who resigned in September is also open for Trump’s nomination.
Stanley Fischer resigned just three years from his appointment to the Fed’s board in May 2014. Before that Fisher served for years as the governor of the Bank of Israel with a long and distinguished career as an academic economist and International Monetary Fund’s chief economist.
Although his monetary policy views were more hawkish than that of Yellen, he always provided reliable support for measures strengthening financial regulation. In recent months he has joined Ms. Yellen in warning against weakening regulations that have been enacted since 2008.
Regional changes
With William Dudley resigning, the New York Federal Reserve top position will be sought. Dudley’s term would have expired in January of 2019 when reaching 10-year policy-limit in the role.
The New York Federal Reserve has a special position in the setup of policy-setting Federal Open Market Committee because it is assigned a permanent voting right while voting rights for other regional Fed presidents are prescribed by rotation basis.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
EUR/USD stays below 1.0700 ahead of US data
EUR/USD stays in a consolidation phase slightly below 1.0700 in the European session on Wednesday. Upbeat IFO sentiment data from Germany helps the Euro hold its ground as market focus shifts to US Durable Goods Orders data.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold manages to hold above $2,300
Gold struggles to stage a rebound following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% ahead of US data, not allowing XAU/USD to gain traction.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.