16 February 2017
Global Economic Perspectives
Global
North AmericaEconomics
Global Economic
Perspectives
Date
16 February 2017
Deutsche Bank
Research
The Fed leadership shakeup
the coming months. By April, there will be at least three vacancies on
the seven-seat Board of Governors for Trump to ll. This potential for a
dramatic Fed shakeup has started to come into focus for markets. We
discuss why the Fed Chair matters, what characteristics a successful
Chair should have, and potential candidates.
replace Chair Yellen. There has been little indication from the Trump
administration about possible candidates, and the range of outcomes
seems wider than in the past, given that Trump&39;s economic team is
composed of individuals that were previously relatively unknown in policy
circles and who have not been associated with past administrations.
on Trump&39;s past comments, the makeup of his economic advisors and
appointments, and the political leanings of Congressional Republicans,
it would seem that he may prefer a candidate that:(1) has signicant
experience in markets and/or business (i.e., a market practitioner rather
than an academic economist),(2) does not have strong hawkish leanings
that would work against Trump&39;s growth agenda, and (3) does not
forcefully reject greater Congressional oversight of the Fed.
environment. But Yellen&39;s replacement could be even more important, as
he or she may well preside over an economy that is near full employment
and that is given a large dose of scal stimulus. This raises the risk that
the Fed could fall behind the curve.
forward. The FOMC has become more centrist in recent years, with the
number of dissenting votes, especially among Fed Governors, unusually
low. These numbers were much higher during the 1970s and 80s, when
Fed leadership appointed by one Administration faced dissenting votes by
new governors appointed under the next Administration. Looking ahead,
less consensus and more dissents would seem likely if there is a shift
away from the center at the top of the Fed leadership, especially if some
of the centrists now in oce remain until their terms run out.
Peter Hooper, Ph.D
Chief Economist
+1-212-250-7352
Michael Spencer, Ph.D
Chief Economist
+852-22038303
Torsten Slok, Ph.D
Chief Economist
+1-212-250-2155
Matthew Luzzetti, Ph.D
Senior Economist
+1-212-250-6161
Deutsche Bank Securities Inc.
DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P)057/04/2016.
Distributed on:16/02/201718:15:09 GMT
16 February 2017
Global Economic Perspectives
Introduction
President Trump will h
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