In what may well turn out to be a controversial decision President Trump has broken with precedent and decided not to reappoint Janet Yellen to a second term as Fed chair despite praising her for her excellent work as chair. Yellen is a high powered Keynesian economist with a very strong academic background. Her chosen successor Jerome Powell has served on the Fed board for a number of years has a strong background in business, a former partner in the Carlyle Group a major investment company and is a trained lawyer. He lacks formal training in economics however. So for the first time in  37 years the new Fed chair will not be an economist. In the past one of the longest serving Fed chairs William McChesney Martin (1951-1970) who served five presidents from Harry Truman to Richard Nixon and one of the most influential Marriner Eccles (1934-1948) did not have degrees in economics. However, both were effective chairs.Martin had a background in Wall Street and had done graduate work in economics at Columbia university although his first degree was in English and Latin from Yale. Also his father helped write the Federal Reserve Act in 1913 and was later governor and then president of the Federal Reserve of St. Louis. In Eccles’s case  he was a very successful businessman and banker who in some ways independently anticipated the work of Keynes.

Powell has voted with Yellen on keeping interest rates low for as long as was needed to promote recovery. But he is apparently more sceptical of quantitative easing. So it remains to be seen if once he assumes the chair next February he seeks to accelerate the unwinding of the program which clearly has played an important role in healing the American economy after the crash.Unemployment is now 4.1 % and trending  slowly downward. It would be a mistake not to let this trend continue by prematurely raising interest rates.