Janet Yellen says she will leave US Federal Reserve once successor is sworn in

Federal Reserve Chair Janet Yellen said she will step down from its Board of Governors once her successor is sworn into the office, widening the scope for President Donald Trump to shape the US central bank’s leadership for years to come.

Trump has nominated Jerome Powell to replace Yellen, 71, when her term ends in February, though his chairmanship is still subject to Senate confirmation. That move bucked a long-standing tradition of presidents reappointing their predecessor’s Fed pick.

“As I prepare to leave the Board, I am gratified that the financial system is much stronger than a decade ago, better able to withstand future bouts of instability and continue supporting the economic aspirations of American families and businesses,” Yellen, the first woman to lead the US central bank, wrote on Monday in her letter of resignation to Trump.

Her decision to leave will give Trump a fourth spot to fill on the Fed’s seven-person Board of Governors in Washington, including a vice-chairman spot. The White House has said that Trump is focused on making a selection for that position this year.

“There is some degree of urgency,” said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in New York. “Four is problematic, three is probably not workable for very long, on the Board – there’s just too much else to do aside from monetary policy.”

Fed governors lead a number of internal working committees on areas including banking supervision, consumer affairs and the US payments system. Leaving seats unfilled for a prolonged period could slow progress on this work, while also diluting the number of votes that governors have on setting the US cost of borrowing. Five of the 12 regional Fed presidents vote on policy every year.