The chair of the federal reserve is the leader of the nation’s central bank. As stipulated by the Banking Act of 1935, presidents can designate a chairman for four-year terms with the advice and consent of the Senate. The chairman also serves as the head of the Fed’s Federal Open Market Committee, which is the country’s principal monetary policymaking body. The Fed chair is the public face of the board of governors and testifies to Congress twice a year about the economy and monetary policy.
Jerome Powell, who replaced Janet Yellen in early 2018, has largely followed Yellen’s blueprint for slowly raising interest rates as long as the economy continues to grow and inflation is expected to rise. But he is not without his critics on Wall Street and has pushed for loosening some Fed regulations, particularly those that affect smaller banks.
Fed chairs have a wide range of backgrounds, but they all share the same goal: to keep the economy growing in a way that helps everyone. They work closely with their colleagues on the board of governors and at the regional Fed banks to set short-term monetary policy, which is based on the current economic outlook and the risks that might pose an obstacle to growth. They’re also charged with preventing financial crises and keeping the financial system stable.
The Fed chair isn’t the only one who sets monetary policy, but they are the most visible members of the board and the most powerful of the seven governors who sit on the Federal Open Market Committee. They also set the agenda for board meetings and serve as presiding officers. Although they must act by consensus, the chair’s opinion carries more weight than any other member of the Fed, including the presidents of the regional Fed banks.
Jerome Powell is a businessman and financier who previously worked at Goldman Sachs and served as a member of the Fed’s Board of Governors from 2006 to 2017. He has never dissented on an interest-rate decision as chair and supports Yellen’s plan to gradually raise rates.
Powell’s term on the Board of Governors expires in 2022, and he is eligible to be nominated for a second four-year term in 2024. He’s also been nominated to replace Lael Brainard as vice chair of the Board for supervision of depository institutions and has been picked by Biden to replace Randal Quarles as deputy chair for (bank) supervision for a term that would start in 2032. Both of these picks are pending confirmation in the Senate. If confirmed, they’ll join fellow Republicans Sarah Bloom Raskin and Philip Jefferson. No Democrat has ever held the role. The last non-Democrat to serve was Paul Volcker, who began his term in 1980. That was the year that he created the Fed’s “money supply manipulation” policies, which included buying billions of dollars worth of Treasury bonds to pump money into the financial system and prevent the economy from collapsing.