Simon Potter: the financial plumber who will raise the Fed's rate

Whenever the Federal Reserve decides to raise interest rates, it will turn to a British-born economist named Simon Potter to do the job.

Potter is in charge of hitting the US central bank's target for the federal funds rate, the key interest rate that the Fed uses for monetary policy. He heads a group of traders at the Federal Reserve Bank of New York who operate from the ninth floor of the bank's imposing, Italian Renaissance-style headquarters in Manhattan.

The rate-setting Federal Open Market Committee last week decided, at the end of a two-day meeting in Washington, not to raise the rate, which has been at a historic low of zero to 0.25 per cent since December 2008.

Its next two meetings will be held next month and in December. Whenever it does raise, it will reflect the Fed's confidence that the economy is strong enough to withstand costlier money - and its worry that super-low rates could eventually cause inflation to rise above its 2 per cent target.

That is where Potter comes in. Although there are 12 reserve banks in the Fed system, New York is primus inter pares, first among equals.

Monetary policy is decided in Washington, and hundreds of economists and other Fed experts throughout the Federal Reserve System have been involved in designing new tools to carry that policy out. Ultimately, though, those tools will be put to work by Potter and his team. They operate the plumbing of the US financial system, opening and closing valves to make money flow where the Fed wants it to go.

"Simon is exceptionally capable and experienced, but he and the Fed will be trying to do something that they've never had to do before," says Carl Tannenbaum, the chief economist at Northern Trust.