Fed Vice Chairman Richard Clarida to Resign

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Clarida’s departure follows criticism of February 2020 financial transactions

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Mr Clarida was Fed Chairman Jerome Powell’s top lieutenant, who was instrumental in securing Clarida’s appointment from then-President Donald Trump in April 2018. Mr. Clarida was a professor of economics at Columbia University and a former economist at the bond giant. Pacific Investment Management Company achieved Senate confirmation in September 2018.

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Most notably, Mr. Clarida played a major role in overseeing the Fed’s framework review in 2019, which culminated in 2020 with a significant change in the conduct of interest-rate policy by the central bank. Those changes effectively increased the Fed’s inflation target by saying that the central bank should take the previous period of inflation below the 2% target, by seeking a period of inflation above that level, particularly after a gap in which It was unable to provide much incentive as interest rates were reduced to zero.

The framework reform also said officials would not raise interest rates simply because the unemployment rate falls below the level predicted by fuel price pressures – a turning point from a consensus that has guided central bank policy since the 1980s. Was.

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Mr Clarida’s term on the Fed’s board of governors was due to end in late January, although he could serve longer, pending confirmation of a White House candidate to take his seat.

His departure is not expected to have a meaningful near-term impact on Fed policy as it was already anticipated that he would leave in early 2022. But his absence could be significant nonetheless as the Fed’s new outline remains unclear, and Mr. Clarida has led the way in fleshing out some of the details.

Write Nick Timiros and [email protected]

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