A successful Federal Reserve chair must be a respected analyst of the economy who can “stand on their own two feet in that regard” to forge a consensus among colleagues who serve on the policy-setting Federal Open Market Committee, Dallas Fed President Robert Kaplan said.
The central bank needs a leader who’s an “expert person that can analyze the economy and have views on monetary policy that are respected,” Kaplan said Friday in an interview on Bloomberg Radio. “The reason that’s so critical is the second part of the job — which is they’ve got to be able to mobilize a consensus, forge a consensus among presidents and governors,” on the FOMC.
Chair Janet Yellen’s term ends in February and many analysts expect President Donald Trump will replace rather than renominate her. Fed chairs have been Ph.D. economists since the late 1980s. While two of the most commonly floated names for the job — Gary Cohn and Kevin Warsh — would break with that tradition, both have extensive backgrounds working in financial markets and economics.
In his book about the Fed’s evolution, historian Peter Conti-Brown points out that “being an economist seems to be something of a prerequisite for the Fed chair,” not because the leader needs to model the economy themselves, but because they need to be able to evaluate the work of Fed staff economists as part of the job.
Turning to the U.S. economy, Kaplan noted that a recent price-gain slowdown was probably partly due to temporary factors, and partly due to business’s diminished pricing power in an era of technological progress and globalization.
“I believe strongly that some of this is transitory,” Kaplan said ahead of the release of consumer price data, published at 8:30 a.m. in Washington, “but I think some of it is not transitory.”
The data release showed that price pressures were weak again in June.
