Wealth Management Owings Mills
By Ryan Wibberley, Chief Executive Officer of CIC Wealth
A Federal Reserve Chairman plays a very important role. The Fed has the power to push interest rates up or down and to keep prices stable and employment strong, or it can have the exact opposite effect. CIC Wealth CEO, Ryan Wibberley, explains what we can expect from the Fed’s newly appointed President, Jerome Powell. While Powell has experience in more specific finance areas, he has completed his undergraduate work as an economist and has been trained as a lawyer. Powell is not the traditional economist you would expect, unlike Yellen or her predecessor, Ben Bernanke. Since a chairman’s responsibility is so important to the economy, the Fed’s leaders were career economists who spent almost their entire lives studying the economy and all the subtle changes that can lead to dramatic economic changes. History is not always a good judgement of the future, and yet Powell is still somewhat of an unknown wild card, in which some say is a risky choice for an economy that finally seems to be on a solid footing. Powell is not particularly well known, but political experts predict that Yellen’s methodological approach to influencing interest rates will continue. The Fed often switches on to help cool the economy by making money more expensive for borrowing. All of this is part of the delicate balance that keeps the economy under control but growing. The Fed understands that a thriving economy involves higher interest rates to keep growth and inflation under control. Powell could therefore push a bit faster to increase interest rates. Political analysts say that Trump handpicked Powell because he can help Republicans further restrict their goal. Trump is dedicated to improving economic growth and the growing economy. Thus, Trump advocates or reduces the regulation in the Fed, although many people believe this is a potentially disastrous step. Perhaps the underlying question, therefore has more to do with the extent of Trump’s influence over Powell if it is confirmed.