Jerome Powell is the first Federal Reserve chair in over four decades without an economics degree, but he has already demonstrated his ability to learn on the job. Jane Lewis reports.
When Jerome Powell was revealed as Donald Trump’s pick to head the Federal Reserve, the US central bank, last autumn, it was widely noted he was one of the richest Fed chiefs ever. He was also the first in 40 years without an economics degree. No matter, said people close to him. The thing about “Mr Ordinary”, as The Wall Street Journal immediately dubbed him, is that he does his homework and then gets on with the job. When he joined the Fed board in 2012, he “did not know much about macroeconomics or monetary policy”, a former colleague told The Washington Post. But Powell, renowned for staggering into meetings under the weight of his prep materials, has spent the past five years immersing himself in the technical minutiae. “In the three years we worked together,” reports another colleague, “there was only one thing he asked for: larger binders.”
True to form, after a baptism of fire – he took over from Janet Yellen at the peak of last month’s market fright over inflation – Powell seems to be settling nicely into his role, says Dealbreaker. Witness his “learning-by-doing-approach to becoming an expert bulls****r”. During his first testimony to the Senate “he clearly suggested the economy [was] accelerating and explicitly stated that inflation is moving up”, thereby causing a minor fright in the markets. Realising he had rattled investors, “ol’ Jay” quickly rectified his “mistake” in a more nuanced appearance days later, showing that he was capable of “employing doublespeak”.
Walking a tricky tightrope
Yet the fact remains that Powell takes over at a “delicate moment”, says The New Yorker. “With no reliable partner in the White House or on Capitol Hill… he has to finish the job that Yellen started”: rolling back the extraordinary measures taken post-crisis without causing a relapse. Maintaining a “gradualist approach” will be tricky – especially since the president who appointed him has just added a substantial stimulus to an already buoyant economy. Even if Powell succeeds, “the journey is unlikely to be without some turbulence”.
“There are two types of Fed chairman,” says The Wall Street Journal: “commanding personalities and consensus builders.” Powell, 64, seems firmly in the latter camp. Friends describe him as “annoyingly normal”, says The Washington Post. He still lives in Chevy Chase – the Maryland suburb where he grew up – and often rides his bike the eight miles to the Fed. He plays golf and the guitar and has “an odd ability to repeat people’s sentences back to them”, a quirk illustrating “his smarts – and how closely he listens”.
After studying politics at Princeton and law at Georgetown, Powell worked as a lawyer before moving into investment banking in 1984 with Dillon, Read & Co. In 1990, he served as a Treasury under-secretary in George HW Bush’s administration. Seven years later he joined private-equity group Carlyle, earning a fortune estimated at between $19m and $55m. En route to the Fed, he traded this job to work for $1 a year at the Bipartisan Policy Center, a Washington think tank.
With his self-made wealth and Wall Street background, Powell “fits the mould of a typical Trump pick”, says The Washington Post. Yet, in temperament, he couldn’t be more different from the bombastic president. “I never saw him lose his temper,” says one Fed board colleague. That may be tested in the months ahead.