Powell's mystery Fed board poses continuity risk

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Powell's mystery Fed board poses continuity risk

Federal Reserve Chair Janet Yellen said she will step down from its Board of Governors once her successor is sworn into the office, widening the scope for President Donald Trump to shape the USA central bank's leadership for years to come.

Yellen's term as Fed chair expires in February, 2018, while her term as Fed governor will end in January, 2024.

"Yellen submitted her resignation Monday as a Member of the Board of Governors of the Federal Reserve System, effective upon the swearing in of her successor as Chair", the Fed said in a statement on Monday. She then served as president of the Fed's San Francisco regional bank, then Fed board vice chairman.

Trump decided not to renominate Yellen, 71, to lead the Fed, opting this month to tap Fed Gov. Jerome H. Powell instead. If he fills the remaining vacant positions, Trump will have appointed five of the seven members on the board of governors.

Trump has already installed Randal Quarles as vice chair of supervision and will now have the opportunity to name a vice chair and three more governors. As a governor, she would have had a vote on monetary policy. In comments a week before announcing his decision, Trump had suggested that while he held Yellen in high regard, he might want to make his own mark on the central bank by selecting someone else for the top job. In 2014, Yellen succeeded Ben Bernanke to become the first woman to head the USA central bank.

But it's standard practice for a Fed leader to step down once his or her term as chair ends.

In a letter of resignation to Trump, Yellen said she is "gratified that the financial system is much stronger than a decade ago", and that the economy has improved substantially.

Powell's nomination by President Trump marked the first time in decades that a president hasn't reappointed a chief of the central bank for a second term. She also touted the economy's gains over the last eight years, noting that 17 million jobs have been created.

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