US Federal Reserve vice chair Stanley Fischer resigning earlier than expected in mid-October

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Federal Reserve vice-chair Stanley Fischer drives home a point. Fischer will resign in October 2017 for personal reasons, leaving a fourth vacancy on the seven-member Fed governing board. Photo: AP

Published: 12:41am, 7 Sep 2017Updated: 12:41am, 7 Sep 2017

Federal Reserve Vice Chairman Stanley Fischer has resigned effective in mid-October, giving President Donald Trump scope to start reshaping the leadership of the US central bank sooner than expected and clouding the longer-term outlook for monetary policy.

Fischer, 73, was appointed to the Fed by President Barack Obama in 2014 to a term as vice chair that would have expired in June 2018. He cited “personal reasons” in a resignation letter on Wednesday to Trump for leaving on or around October 13. He will participate at the Federal Open Market Committee’s meeting later this month.

“During my time on the Board, the economy has continued to strengthen, providing millions of additional jobs for working Americans,” Fischer wrote in the letter. “We have built upon earlier steps to make the financial system stronger and more resilient.”

Fed watchers had expected he would step down but not with eight months remaining in his term. His departure will remove an influential voice at a time when the central bank appears divided on the need to hike interest rates again this year despite lower-than-desired inflation. He’s also been a powerful advocate for maintaining post-crisis financial regulations that the Trump administration wants to roll back.

The 2018 Chevrolet Traverse SUV shown getting ready at the 2017 North American International Auto Show in Detroit, Michigan. The US economy has grown steadily under the current Fed, recovering after the 2008 global financial crisis. Photo: AFP

“Fischer was the voice of experience, having been a central banker and his international standing was impeccable,” JPMorgan Chase & Co’s Chief US Economist Michael Feroli said. “It adds a further element of uncertainty to policy and who will be running policy early next year. It adds to the cloudiness of the outlook for monetary policy.”

Policymakers are expected to announce a timetable to start shrinking their US$4.5 trillion balance sheet when they meet September 19-20 in Washington, while leaving rates on hold as they debate another hike before year-end, as officials projected in June.