The Federal Reserve's hawkish faction resigns! Statement | Chairman | Federal Reserve
On Thursday local time, the Federal Reserve Bank of St. Louis in the United States announced that James Brad will resign as the chairman of the local Federal Reserve starting from August 14th and become the dean of the Mitchell Daniels School of Business at Purdue University.
According to a statement released by the St. Louis Federal Reserve on the same day, Brad will continue to stay at the St. Louis Federal Reserve as an advisor for the next month, but has "avoided holding monetary policy and other related positions in the Federal Open Market Committee of the Federal Reserve, and will cease all public speaking.". Catherine O'Neill Pace, the First Vice Chairman of the St. Louis Federal Reserve, has temporarily taken over Brad's position, and the bank's board of directors will begin searching for a "stable, transparent, fair, and inclusive" successor.
Will it weaken the hawkish discourse within the Federal Reserve?
Since the United States experienced its most severe inflation crisis in 40 years, 62 year old Brad has been pushing the Federal Reserve to take more aggressive monetary tightening actions. He believes that the Federal Reserve's "temporary theory" of inflation is wrong, and he was also one of the first officials to call for a 75 basis point rate hike.
Brad does not have voting rights in the Federal Open Market Committee this year, but he has been seen by market insiders as a policy barometer. In 2010, after he wrote an article calling on the Federal Reserve to avoid deflation by purchasing US treasury bond bonds, the Federal Reserve announced the second round of bond purchase plan.
"Brad represents the academic power within the FOMC. He used to be a dove, but in recent years he has become a hawk. He is adept at using theory to explain why he should take the lead in fighting inflation." LH Meyer/Monetary Policy Analytics economist Derek Tang said, "Brad's departure will weaken the discourse power of hawks within the Federal Reserve. Several members who are also vocal but have a more dovish stance may have greater influence, such as Chicago Fed Chairman Goolsby.".
"Brad has been one of the most thoughtful members of the FOMC for many years," said Stanley, Chief American Economist at Santander US Capital Markets. "His views are not easily summarized. He is sometimes hawkish, sometimes dove, and his views always resonate."
Another vacancy
Brad's resignation will leave a third vacancy for the 19 member FOMC. At the time of his departure, Federal Reserve candidate Kugler was waiting for senators to confirm his nomination, and the Kansas City Federal Reserve is still searching for a successor to Chairman George, who retired in January.
In a statement, Brad said, "I have been a member of the St. Louis Fed for the past 33 years, including serving as the Fed Chairman for the past 15 years, which is an honor." Brad is currently the longest serving Fed Chairman in any region and has not given any indication of the reason for his early resignation.
The head of the economics department at the University of Miami and former economist at the St. Louis Federal Reserve, Anderfato, said his departure was shocking. Anderfato said that Brad "doesn't often raise objections, but if he does, what he says is always right, he always leads the curve."