Abby Joseph Cohen, former chief strategist of Goldman Sachs, thinks "we've been lucky to have had two chairs of the Federal Reserve who were experts in the most pressing problems". Ben Bernanke, who chaired the US central bank during the financial crisis, was a Great Depression expert. Janet Yellen is a labour-market expert at a time when employment issues are to the fore.
Now that US president Donald Trump is looking to appoint a new Fed chair, Cohen thinks "it would be great" to have Yellen back. But she's not the only candidate for the job, and Cohen worries that some aren't sufficiently flexible in their thinking, given the "unprecedented issues" they will have to tackle, including "the unwinding of asset purchases and historically low levels of inflation". Whoever Trump picks, Fed policy is unlikely to change dramatically. It will "keep taking the foot off the accelerator gradually", as opposed to "slamming on the brakes".
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One potential spanner in the works is Trump's tax cuts. Cohen doesn't believe that the US economy needs any extra fiscal stimulus and is concerned about the rising deficit (the gap between government spending and the tax take) that will result. If the deficit gets too high, or investors lose faith in the president, then "foreign investors could dump dollars and Treasuries", which would hurt markets.
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Redundancy on the rise – how to manage a sudden drop in incomeUnemployment and redundancies are higher than a year ago, new figures show. We look at how to protect your finances if you face a sudden loss of income.
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What is the ideal time to spend on the property market? How you could risk losing thousandsTime on the housing market matters – get an offer too quickly or too slowly and you’ll often find you have to settle for less than the asking price. What is the ideal time for a property to spend on the market?
