For most Americans, the chair of the federal reserve of the united states is a name they’ve never heard before. Outside of political geeks and econ wonks, the position might not even sound like it’s important. But the Federal Reserve system is one of the most powerful federal agencies in the country, and it’s not a position that should be taken lightly.
The Fed is the central bank that’s responsible for setting short-term monetary policy in the United States. It’s an independent, quasi-governmental agency that reports to Congress twice a year and undergoes an annual audit. The president nominates a chair of the board of governors, who must be confirmed by the Senate, and the chair leads meetings and sets the agenda for the Federal Open Market Committee (FOMC), which makes monetary policy. The chair also testifies to Congress twice a year on the state of the economy and the Fed’s role in it.
Aside from the president, the rest of the Fed’s board is comprised of nine members who are elected by other members of their respective districts. The chairman and two vice chairs of the board are nominated by the president, but must be approved by the Senate to serve four-year terms. In addition to their duties as board members, these leaders are responsible for selecting the presidents of each of the 12 Federal Reserve Banks.
While the positions of chair and vice chair are largely ceremonial, there’s no doubt that the person who holds the title has enormous power in the US economy. Investors and analysts hang on their every word, and markets instantly react to the slightest clues about interest rate policy. Moreover, the chair is the public face of the Fed and testifies to Congress twice a year on its role in the economy.
Jerome Hayden Powell was appointed as chair of the Federal Reserve Board in February 2018. He is an attorney and investment banker with experience in government and private practice. Prior to joining the Fed, he served as an assistant and under secretary of the Treasury under President George H.W. Bush. In that capacity, he helped investigate the investment bank Salomon Brothers for manipulating the treasury bond market and led the effort to punish the firm with record fines and restitution for its role in the financial crisis of 2008.
Since becoming chair, Powell has kept interest rates near zero, while slowly raising them to combat rising inflation. But he has also raised concerns about the Fed’s use of quantitative easing, an unconventional monetary policy in which nations’ central banks buy up bonds and inject money into their economies, which can lower interest rates. During a hearing last month, Senate Banking Committee ranking member Tim Scott called on Powell to show “thoughtful and independent leadership” in these times of bank supervision failures and historically high prices that aren’t being matched by rising wages. Watch the full hearing here.