Quals Resigns as US Fed Vice Chair... Positive Signal for Powell's Reappointment?

Randall Quarles, Vice Chairman of the Fed

[Asia Economy New York=Correspondent Baek Jong-min] Randal Quarles, Vice Chairman of the U.S. Federal Reserve (Fed), announced his resignation within the year. This is analyzed as a factor that removes obstacles for President Joe Biden's decision to reappoint Jerome Powell as Fed Chairman.

On the 8th (local time), Vice Chairman Quarles sent a resignation letter to President Biden, indicating that he would step down from his position as Fed Governor by December. Quarles was first appointed as Vice Chairman for Supervision by former President Donald Trump in 2017.

He served as the first Vice Chairman for Supervision under the Dodd-Frank Act, which was introduced to strengthen financial supervision, but instead led efforts to ease banking regulations. Because of this, progressive Democrats have criticized Quarles.

The New York Times reported that progressive Democrats would welcome Quarles' resignation.

Although Quarles' term as Fed Governor runs until 2032, his term as Vice Chairman for Supervision has ended, and his term as Chairman of the Financial Stability Board also ends the next day, so it was widely expected that he would retire early.

With Quarles' resignation, the restructuring of the Fed's governance has effectively begun.

The Fed Board consists of seven governors. One seat is currently vacant, and with Quarles' departure and the expiration of Vice Chairman Richard Clarida's term in January next year, three seats will be vacant. Chairman Powell's term also ends in February next year.

President Biden is likely to fill the Fed vacancies with progressive figures, but the key appointment this time is undoubtedly the Fed Chairman.

President Biden is expected to announce whether he will reappoint Chairman Powell first. Last week, Biden indicated that he would soon decide on the Fed Chairman. Although there was no specific mention, Treasury Secretary Janet Yellen praised Powell for his excellent performance, adding weight to the possibility of Powell's reappointment.

Chairman Powell and Fed Governor Lael Brainard reportedly met with President Biden for interviews last week.

The Wall Street Journal interpreted Vice Chairman Quarles' resignation as removing obstacles for President Biden's decision to reappoint Chairman Powell. It is analyzed that criticism of Chairman Powell from progressive figures may decrease due to Quarles' resignation.

If President Biden chooses to reappoint Chairman Powell, it is widely believed that Governor Brainard will become the Fed Vice Chairman.