What Jerome Powell means for your wallet

Assuming Powell is confirmed by the Senate, he would replace Yellen when her term ends in February. An Obama appointee, Yellen took over in February 2014 in the midst of an economic expansion that began in early 2009 and is now in its ninth year.

The Federal Reserve is charged with using monetary policy to keep inflation at bay and employment strong, and uses a key interest rate to try accomplishing that. Called the federal funds rate, it’s the rate that banks charge one another for overnight loans.

When the Fed nudges that rate up to help cool off the economy by making money more expensive to borrow, banks typically pass on the higher cost of borrowing to consumers in the form of higher rates on loans and credit.

Jerome Powell

Age: 64

Nominated by President Donald Trump to replace Janet Yellen in February 2018 as chair of the Federal Reserve.

2012-current: Member of the Federal Reserve Board of Governors. Appointed by former President Barack Obama.

Career highlights:

2010-2012: Visiting scholar at the Bipartisan Policy Center, focusing on federal and state fiscal issues.

1997-2005: Partner at asset manager The Carlyle Group of Washington, D.C.

1990-1993: Served as undersecretary for finance in the Treasury Department under former President George W. Bush.

Education: Bachelor’s degree in politics from Princeton University; law degree from Georgetown University (and editor-in-chief of Georgetown Law Journal).

While the federal funds rate has risen from zero to 1.25 percent under Yellen’s tenure — including two hikes of 0.25 percentage points this year — it remains historically low. And on Wednesday, the Federal Open Market Committee, which is the Federal Reserve’s policy making arm, left that rate unchanged.

At its next meeting, scheduled for Dec. 12-13, the group is expected to raise the federal funds rate by another 0.25 percentage points.

“It’s not a done deal, but they’ve made it pretty clear that they are highly likely to [make that increase] in December,” Wright said.

While many consumers might pay little attention to the eight meetings the Fed holds annually — or who’s at the central bank’s helm, for that matter — the interest rates paid on borrowed money (and earned on certain bank accounts) typically trace back to decisions made at these policymaking get-togethers. (Click on graphic below to enlarge.)

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