Janet Yellen to depart US Fed in February
The decision comes less than three weeks after President Donald Trump broke with tradition to replace Yellen rather than name her for another four-year term. He tapped Fed governor Jerome Powell to take over the helm of the central bank.
Yellen’s term as chair expires in February but her position on the Board of Governors runs until 2024. Fed chiefs typically have stepped down from the board after finishing their term as chair.
In her resignation letter to Donald Trump, Yellen said she was pleased by the US economy’s continuing recovery from the Great Recession of 2008-2009.
She also mentioned the positive impact of the financial reforms put in place after the global financial crisis, which the Trump administration has moved to curtail.
“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,” she wrote.
Observers said Yellen had hurt her chances of winning a second term over the summer by publicly defending reforms under the Dodd-Frank Wall Street reform laws enacted in 2010, which have drawn some criticism especially for the burden imposed on small banks.
Yellen said she was confident Powell would carry on the Fed’s mission. He was seen as a consensus, continuity candidate -- unlikely to raise rates quickly and dampen economic expansion but also more amenable to the administration’s deregulation push.
Trump is the first president in his first term since Jimmy Carter not to reappoint the sitting central bank chief.
Yellen’s departure brings the number of vacancies on the Fed’s seven-member board back to four, expanding Trump’s ability to determine the direction of monetary policy and banking regulation.
Former President Barack Obama left office in January with two Fed seats unfilled after nominations stalled in the Senate.
Successive departures since then have swelled the number of openings.
“Assuming Powell is confirmed, Lael Brainard will be the only other Obama appointee on the board,” Chris Low of FTN Financial said in a note to clients.
Media reports said last week Trump was considering appointing Allianz economic advisor Mohamed El-Erian as a Fed vice chair.