Janet Yellen to leave Fed after successor takes over as chair

Key Points
  • Fed Chair Janet Yellen announced Monday that she will leave the Federal Reserve after he successor is sworn in, presumably in February when her term expires.
  • Her departure leaves President Donald Trump with four seats to fill on the Fed's board of governors.
Yellen to resign from Fed board when Powell sworn in

Fed Chair Janet Yellen announced Monday that she will leave the Federal Reserve after her successor is sworn in.

Yellen's four-term term as head of the central bank comes to an end in February, and she has the option of staying on as governor. President Donald Trump has nominated current Fed Governor Jerome Powell to take over the position.

Yellen's term as governor doesn't expire until Jan. 31, 2024.

"As I prepare to leave the Board, I am gratified that the financial system is much stronger than a decade ago, better able to withstand future bouts of instability and continue supporting the economic aspirations of American family and businesses," she said in a letter to Trump. "I am also gratified by the substantial improvement in the economy since the crisis."

With her departure, Trump will have four open seats to fill on the board of governors. The Senate recently confirmed Randal Quarles to one position, but the president has not nominated others for the remaining vacancies.

During her tenure, Yellen oversaw the first rate hike in seven years as the Fed sought to normalize policy after the extremely accommodative measures put in place during the financial crisis.

Trump vilified Yellen during the 2016 presidential campaign, alleging she kept rates low for political reasons to benefit former President Barack Obama. However, his tone softened after he took office, and he took time to praise Yellen even as he nominated Powell.

Yellen's was known as a policy dove, preferring to keep interest rates low for years after the Great Recession ended. The Fed's balance sheet ballooned to $4.5 trillion during three rounds of bond purchases, most of which took place before Yellen took over the chair's seat from Ben Bernanke.

In the years since, Yellen has presided over four interest rate hikes, plus the gradual reduction in the balance sheet that began in October.

She promised to assist in Powell's transition and expressed confidence that he is "deeply committed" to the Fed's mission. With just one term in office, Yellen is the briefest-serving central bank chief since G. William Miller, who served from 1978-79.