Fed Vice President Fischer resigns

Sep 07, 2017, 01:58
Fed Vice President Fischer resigns

Fischer, 73, cited "personal reasons", for his resignation, which will take effect October 13. I'm personally grateful for his friendship and his service.

The resignation means Trump will get to nominate candidates this fall for the Fed's top two jobs, putting his stamp on the central bank.

"Fischer is seen as a hawk on monetary policy, relative to the Fed chair, having advocated higher interest rates in response to the strengthening USA economy", Financial Times said.

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As Yellen's current term expires in February next year, Trump has also begun the search for the next Fed Chair.

In a note to clients on Wednesday, Paul Ashworth, chief USA economist at Capital Economics, wrote that Fischer's resignation "presumably lowers the odds of [Yellen] being nominated for a second term [as Fed Chair]".

"Accordingly, while Fischer's resignation may not affect the outlook for monetary policy that much, it could mark the beginning, along with the nomination of Randall Quarles to be Vice Chair of Supervision, of a shift toward a Federal Board of Governors that is more amenable to deregulation".

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Fischer has been highly influential at the Fed. This latest vacancy comes as Yellen's future leading the central bank remains under considerable doubt. Markets sometimes moved on his comments.

Former President Barack Obama nominated Fischer as vice chair of the Federal Reserve System, the USA central bank, in January 2014. Previously, he was vice chairman of Citigroup Inc. He has worked as a chief economist at the World Bank and taught economics at MIT.

Former Board of Governors member Daniel Tarullo stepped down in April. He helped shape regulatory policy keeping banks in check and accountable, and he stands by the Fed's approach even as Trump considers alternatives. Before that, Fed officials hadn't voted for a rate hike in almost a decade.

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"The strength of the financial system is absolutely essential to the ability of the economy to continue to grow at a reasonable rate, and taking actions which remove the changes that were made to strengthen the structure of the financial system is very risky", Fischer said in April.

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