Update: Trump Names Powell To Replace Yellen As Fed Chair

The President's nomination will be passed to the Senate for confirmation.

The announcement ends months of speculation over who will take over from Janet Yellen next year, who has served as chair since 2014, with possible candidates including Kevin Warsh and John Taylor as well as the reappointment of Yellen.

Powell is expected to stay the course on monetary policy if the economy continues its steady growth.

"He is strong, he is committed, he is smart," Trump said yesterday when he introduced Powell as his choice, reported the New York Times. 

Using Powell's nickname, the President added, "I am confident that with Jay as a wise steward of the Federal Reserve, it will have the leadership it needs in the years to come."

He has consistently voted with Yellen when it comes to monetary policy in his role as governor of the Federal Reserve, a role he has served since 2012.

Colleagues have considered him a centrist in contrast to his more hawkish rivals. He also served in the US Treasury in the 1990s.

As well as his monetary policy views, he is expected to be more likely to ease financial regulation than Yellen, something Trump campaigned for in his presidential campaign.

Neil Birrell, chief investment officer of Premier Asset Management, said Powell's background in the financial sector means he is likely to be perceived as sensitive to markets when it comes to policy decisions.

"It could also be expected that he will be an advocate of the President's desire to have a lighter regulatory touch on the financial industry and his appointment should be taken well by markets.

"The unknown factor will be how he leads the committee in difficult times. There is likely to be a slowdown in the economy in the next four years and as interest rates are unlikely to have risen to a level from which they can be significantly cut, he will have a challenge on his hands. But that may be some time off and for now his appointment looks to be one that promotes continuity and will therefore be pro-cyclical and pro-market."

Ashok Bhatia, senior portfolio manager at Neuberger Berman said: "Powell is widely considered to be the 'safe' choice for the role. A member of the Fed's board of governors since 2012, he has been a consistent supporter of Yellen's patient approach to policy normalisation and his nomination raises expectations of continuity with the slow-and-steady path charted by the Yellen Fed. 

"Despite the change in leadership, we anticipate the Fed will continue to gradually hike the Fed's benchmark rate, as conditions warrant, while at the same time seeking to unwind the central bank's bloated balance sheet in a manner that spares the financial markets from turmoil."