Published: Thu, September 07, 2017
Global | By Maureen Mccoy

Janet Yellen's No. 2 at the Fed is stepping down

Janet Yellen's No. 2 at the Fed is stepping down

Fischer cited personal reasons in his letter to Trump, with his health possibly the cause.

The president will now have the opportunity to replace all but two members of the Board of Governors at the Fed during his current term in office. His early departure from the Fed also adds another layer of intrigue to the upcoming decision from Trump on who to appoint to the Fed's top spot; Yellen's four-year term is set to expire in February 2018.

Fischer is seen as the second-most influential member of the Federal Open Market Committee - the Fed committee that sets monetary policy - behind only Chair Janet Yellen. "You're talking about a lot of turnover when uncertainty about Fed policy is already high". Were Trump not to nominate Yellen for a second term, it would mark the first time since 1978 that a sitting Fed chair was not renominated by a new president.

In his two-paragraph letter to the president, Fischer hailed the USA economy's progress and the Fed's reforms to make the financial system more resilient. This latest vacancy comes as Yellen's future leading the central bank remains under considerable doubt.

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At MIT in the 1970s, Fischer taught both Ben Bernanke, who decades later became Fed chair, and Mario Draghi, now the president of the European Central Bank.

Mr. Trump has nominated Randal Quarles for one of the vacancies as vice chairman for bank supervision. The Fed is talking about an interest rate hike, but the real bombshell is reining in the $4.5 trillion USA federal budget.

His Board leadership was informed by experience as governor of the Bank of Israel, vice chairman of Citigroup, deputy managing director of the International Monetary Fund and chief economist of the World Bank. Before that, Fed officials hadn't voted for a rate hike in almost a decade.

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