Fed's Fischer Announces Resignation, to Leave Mid-October

Adjust Comment Print

Federal Reserve Vice Chairman Stanley Fischer today announced that he will step down as a member of the board on or around October 13.

His resignation will provide President Donald Trump with another opportunity to reshape the Fed.

"It's been a privilege to serve on the Federal Reserve board and most especially to work alongside Chair Yellen", Fischer said, citing the improvements in the economy and financial system in recent years. His term as vice chairman expires on June 12, 2018. Yellen's term expires in February.

Significantly, barring any further clarification Fischer's resignation might lead markets to believe it implied a lower likelihood of Fed president Janet Yellen being renewed in her post, said Paul Ashworth, chief USA economist at Capital Economics.

In a note to clients on Wednesday, Paul Ashworth, chief U.S. economist at Capital Economics, wrote that Fischer's resignation "presumably lowers the odds of [Yellen] being nominated for a second term [as Fed Chair]". He also taught economics at MIT for more than 20 years-former Fed chairman Ben Bernanke was a student. Trump has nominated Randal Quarles, an investment-fund manager and former U.S. Treasury official, as Fed's vice chiair of supervision.

Besides Yellen and Fischer's seats, there are already two open spots for Fed governors, who get a permanent vote on the influential committee that raises and lowers interest rates.

Fischer, a former governor of the Bank of Israel and vice chairman of Citigroup, leaves the Fed as the central bank confronts the deepening dilemma of USA monetary policy. He helped shape regulatory policy keeping banks in check and accountable, and he stands by the Fed's approach even as Trump considers alternatives.

The US central bank is slowly raising interest rates as the economy grows and unemployment falls.