Federal Reserve Chair Janet Yellen said on Monday she will resign her seat on the Fed’s Board of Governors once Jerome Powell is confirmed and sworn in to replace her as head of the U.S. central bank.
In a letter to President Donald Trump, which was released by the Fed, Yellen, 71, also vowed to “do my utmost to ensure a smooth transition” to Powell, who was nominated to succeed her by Trump earlier this month.
Powell, also on the seven-member Fed board, must be confirmed by the Senate before assuming his new job. He will have a confirmation hearing next week before the Senate Banking Committee, but no vote on his nomination has been scheduled.
It is expected that Powell will be in place when Yellen’s four-year term as Fed chief ends in February.
Yellen, credited with putting the economy on a firmer footing and steering monetary policy away from the firefighting mode that followed the 2007-2009 recession and financial crisis, could have stayed on as a Fed governor until 2024.
It has been common practice, however, for departing Fed chiefs to also leave the board at the same time as a courtesy to give the successor clear leadership of the group. Board terms run for 14 years.
In her letter to Trump, Yellen said she was “gratified by the substantial improvement in the economy since the crisis,” noting that 17 million net jobs had been added during roughly the last eight years. Yellen served as a Fed vice chair before Democratic President Barack Obama nominated her as Fed chief in 2014.
The economy “by most metrics, is close to achieving the Federal Reserve’s statutory objectives of maximum employment and price stability,” she wrote to Trump, a Republican.
Yellen was the first woman appointed to lead the Fed. Before that role, she was also president of the San Francisco Fed, and head of the White House’s Council of Economic Advisers under President Bill Clinton. She also served a separate term as a Fed governor earlier in the 1990s.
Her departure from the Fed board will give Trump, who lauded the economy’s performance under Yellen but said he wanted to name his own Fed chief, that much more room to reshape the central bank by opening up another spot to fill.
Should he choose to do so, Trump will be able to appoint five of the board’s seven potential members, filling four open seats alongside his sole board appointment to date of Randal Quarles as vice chair for supervision.