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

The Fed really is fighting inflation – so don’t expect an early end to the bear market
Stockmarkets

The Fed really is fighting inflation – so don’t expect an early end to the bear market

In an attempt to contain raging inflation, the Federal Reserve has raised US interest rates by 0.75 percentage points. And it’s going to keep on raisi…
16 Jun 2022
US inflation brings no respite for markets
Inflation

US inflation brings no respite for markets

As US inflation hit a 40-year high, the benchmark S&P 500 stockmarket index slid into a bear market, down more than 20% since its 3 January high.
15 Jun 2022
Recession talk is a red herring – here’s what investors should focus on instead
Investment strategy

Recession talk is a red herring – here’s what investors should focus on instead

There is a lot of talk of impending recession. But that’s not something you should worry too much about, says John Stepek. What’s more important is …
6 Jun 2022
Here’s why markets welcomed America’s big interest rate rise
Stockmarkets

Here’s why markets welcomed America’s big interest rate rise

The US Federal Reserve raised interest rates by half a percentage point – the biggest hike in 20 years. So why did markets rise? John Stepek explains …
5 May 2022

Most Popular

Ray Dalio’s shrewd $10bn bet on the collapse of European stocks
European stockmarkets

Ray Dalio’s shrewd $10bn bet on the collapse of European stocks

Ray Dalio’s Bridgewater hedge fund is putting its money on a collapse in European stocks. It’s likely to pay off, says Matthew Lynn.
3 Jul 2022
UK house prices are definitely cooling off – but are they heading for a fall?
House prices

UK house prices are definitely cooling off – but are they heading for a fall?

UK house prices hit a fresh high in June, but as interest rates start to rise, the market is cooling John Stepek assesses just how much of an effect h…
30 Jun 2022
Persimmon yields 12.3%, but can you trust the company to deliver?
Share tips

Persimmon yields 12.3%, but can you trust the company to deliver?

With a dividend yield of 12.3%, Persimmon looks like a highly attractive prospect for income investors. But that sort of yield can also indicate compa…
1 Jul 2022