Who will succeed Bernanke?

With Larry Summers out of the running, the race is on to succeed Ben Bernanke at the head of the Federal Reserve.

Lawrence Summers, reportedly the White House's preferred candidate to become the new chairman of the Federal Reserve, ruled himself out this week. Whichever candidate President Barack Obama nominates this autumn has to be confirmed by the Senate, and Summers acknowledged that he was unlikely to muster the support of a majority of lawmakers in the upper house. His withdrawal makes the current vice-chairwoman, Janet Yellen, the new frontrunner for the job. Current chairman Ben Bernanke's terms ends on 31 January 2014. Global equity markets rose on the news.

What the commentators said

"Judging by market moves," choosing the world's most powerful banker is "of paramount importance", as Lex pointed out in the Financial Times. But investors are overreacting. For one thing, there is actually little evidence that Yellen is much more dove-ish than Summers might have been, as the markets appeared to assume. And in any case, the chair of the Fed is just one person. "It is not as if Ben Bernanke" started discussing tapering the money-printing programme "without talking to anyone else first".

The wider issue, of course, is why "central bankers continue to be seen as superheroes" at all, as Allister Heath put it in City AM. As MoneyWeek has often pointed out, if central bankers were remotely competent, there would never have been a credit bubble and bust in the first place.

Recommended

Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021
So much for the taper tantrum
Government bonds

So much for the taper tantrum

Rather than throwing a tantrum at the prospect of a cut in US monetary stimulus, as confirmed by US Federal Reserve chairman Jerome Powell, investors …
3 Sep 2021
Will Jerome Powell lay out a tapering timetable today? Probably not
US Economy

Will Jerome Powell lay out a tapering timetable today? Probably not

Investors will be looking for clues on the future of US monetary policy at the Jackson Hole Event today. John Stepek breaks down what investors can ex…
27 Aug 2021
Is inflation here to stay?
Inflation

Is inflation here to stay?

A new paper suggests that unless workers gain more bargaining power, inflation won’t be sustained.
23 Aug 2021

Most Popular

Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021
How you can profit from the power of the grey pound
Share tips

How you can profit from the power of the grey pound

Higher life expectancy and surging asset prices have proved a boon for the baby-boomer generation, which has accumulated vast wealth. Younger generati…
10 Sep 2021