WASHINGTON (AP) — Jerome Powell was sworn in Monday as the 16th chairman of the Federal Reserve on what turned out to be a turbulent day for Wall Street, with the Dow Jones industrial average plunging by more than 1,100 points.
Powell, 65, was given the oath of office by Randal Quarles, the Fed’s vice chairman for supervision, in a ceremony that took place before stock trading opened on Wall Street.
In a pre-recorded video message, Powell did not mention the recent turbulence in financial markets, which saw the Dow shedding 666 points on Friday. That was followed by a decline of 1,175.21 points on Monday, a drop of 4.6 percent, the worst one-day loss in percentage terms in 6 ½ half years.
Powell pledged that he and his colleagues would remain “vigilant” to any emerging economic risks.
Powell succeeds Janet Yellen, the first woman to lead the nation’s central bank in its 100-year history. President Donald Trump picked Powell after deciding to break with recent tradition and not offer Yellen a second four-year term.
Part of the market unease has been attributed to fears that rising wages and higher inflation could prompt the central bank to raise rates more quickly than investors had been expecting. Some analysts said the big sell-off over the last two days may end up taking some pressure off the Fed to hike rates again soon, given that lower stock prices would ease fears of an overheated market.
Diane Swonk, chief economist at Grant Thornton in Chicago, said she was sticking with her forecast that the Fed will raise rates four times this year, with the first hike under Powell coming in March. But if stocks keep falling further, she said she might trim that estimate.
“Today was a hard welcome for Jay Powell,” Swonk said. “But this adjustment in stock prices may make the Fed’s job easier because it could relieve concerns that asset bubbles are developing.”
In an interview broadcast after her final day as Fed chair, Yellen discussed worries about high stock prices. She told CBS on Sunday she did not want to characterize current stock prices as an asset bubble that could burst with dangerous results, though she did see a “source of some concern that asset valuations are so high.”
Powell, who has been on the Fed board since 2012, was tapped by Trump after a highly public search for a new Fed chair. His nomination was approved by the Senate earlier this month for a four-year term as chairman that will end in February 2022. Powell’s current term as a Fed board member does not end until Jan. 31, 2028.
Powell, an investment banker before joining the Fed, said he was committed “to explaining what we’re doing and why we are doing it” in carrying out the Fed’s main jobs of promoting price stability and maximum employment.
“Today, unemployment is low, the economy is growing and inflation is low,” Powell said. “I am also pleased to report that our financial system is now far stronger and more resilient than it was before the financial crisis that began about a decade ago. We intend to keep it that way.”
Powell said that he and his Fed colleagues would work to make sure that the Fed’s regulations are “efficient as well effective.”
Trump was highly critical of the tougher bank rules put in place after the 2008 financial crisis, saying they had harmed economic growth. He has been nominating officials for the Fed and the government’s other bank regulatory jobs who have pledged to do away with unnecessary regulations.