Federal Reserve vice chairman resigns citing ‘personal reasons’

Federal Reserve vice chairman Stanley Fischer has resigned effective in mid-October, giving president Donald Trump scope to start reshaping the leadership of the US central bank sooner than expected and clouding the longer-term outlook for monetary policy.

Fischer, 73, was appointed to the Fed by Barack Obama in 2014 to a term as vice chair that was due to expire in June 2018.

He cited “personal reasons” in a resignation letter Wednesday to Trump for leaving on or around October 13th.

“During my time on the Board, the economy has continued to strengthen, providing millions of additional jobs for working Americans,” he wrote in the letter.

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“We have built upon earlier steps to make the financial system stronger and more resilient.”

Fischer, who has served at the Fed for three years, is leaving before his term as vice chairman expires in June. Fed watchers had thought he would step down, but had not expected it to be so soon.

“Fischer was the voice of experience, having been a central banker and his international standing was impeccable,” said JP Morgan Chase chief US economist Michael Feroli.

“It adds a further element of uncertainty to policy and who will be running policy early next year. It adds to the cloudiness of the outlook for monetary policy.”

Vacancies

His departure will leave four of the seven seats on the Fed Board vacant.

Trump has nominated Randal Quarles, a senior Treasury official under George W Bush, to be a governor and head up the Fed’s regulatory efforts. Quarles’ nomination is still pending before the Senate.

In addition, Janet Yellen’s term as chair expires in February. Trump has said that a renomination of Yellen is under consideration, though the White House is also looking at other candidates. Economists polled by Bloomberg expect him to pick someone else.

Fischer is an elder statesman of American finance. He is a former vice chairman of Citigroup, the former first deputy managing director of the International Monetary Fund, and the former chief economist of the World Bank.

He also served as governor of the Bank of Israel from 2005 to 2013. For more than 20 years, he was a professor at the Massachusetts Institute of Technology, where he influenced generations of economists, from former Fed chairman Ben Bernanke to European Central Bank chief Mario Draghi.

- Bloomberg