Trump Selects Jerome Powell to Lead Federal Reserve

President Trump announced on Thursday that former investment banker and current Federal Reserve Board Governor Jerome Powell would succeed Janet Yellen early next year to become the next Chair of the Federal Reserve. Powell will still need to be confirmed by the Senate before he can ascend to his new role at the United States’ central bank. Trump’s selection ends weeks of speculation on who would take over once Yellen’s term as chair expires in February, although Powell was the favorite and even had the backing of Treasury Secretary Steve Mnuchin.

On Wednesday, the Federal Reserve revealed that it would not seek to hike interest rates this month, but left open the potential for rate increases in December. Powell has served on the Federal Reserve’s Board of Governors since 2012, when he was appointed to the group by former President Barack Obama. Some insiders had encouraged Trump to retain Yellen for another four years at the post, as history shows changing chairs early in a president’s tenure could have a negative effect on the economy.

The president had some kind words for the outgoing chairwoman. Although she will no longer serve as chair, Yellen will retain her appointment on the Fed’s Board of Governors until 2024.

If confirmed, Powell will have his hands full early. As the Fed contemplates raising interest rates in the coming months, short term credit in the form of adjustable rate mortgages, credit cards, and even the national debt will see rising costs that could cause higher risk borrowers to be left out or pay significantly more for credit. With nearly 4 out of 5 Americans already living paycheck to paycheck, higher rates and the subsequent reduced access to traditional capital sources could create financial difficulties for American households. Small dollar lenders, like the tribal lending entities represented by NAFSA, will likely need to fill the gap with reliable credit opportunities for the burgeoning American economy.