MercoPress. South Atlantic News Agency

Powell becomes chairman of the Fed in a turbulent trading day

President Donald Trump picked Powell after deciding to break with recent tradition by not offering Yellen a second four-year term.

Jerome Powell was sworn 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 recorded video message, Powell did not mention the recent turbulence in financial markets, which saw the Dow shed 666 points on Friday. That was followed by a decline of 1,175.21 points on Monday, a drop of 4.6%. Powell pledged that he and his colleagues would remain “vigilant” about 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 by not offering 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 interest rates more quickly than investors had been expecting. Some analysts said the big sell-off over the past two trading days may end up taking some pressure off the Fed to raise 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 increase under Powell coming in March. But if stocks keep falling further, she said, she might trim that estimate.

Powell, who has been on the Fed board since 2012, was tapped by Trump after a highly public search for a new Fed chairman. His nomination was approved by the Senate last 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.