As President Donald Trump gets ready to reveal the new Federal Reserve chair on Thursday, Realtor.com’s Chief Economist Danielle Hale explained what the housing market needs from whoever fills the role.
The current Fed Chair, Janet Yellen, took office Feb. 3, 2014, for a four-year term that ends on Feb. 3, 2018.
Under her leadership, the Fed raised the federal funds rate for first time in nine years in December 2015. It was also under her that the Fed announced it would begin quantitative un-easing.
Both of these initiatives would need to be finished by the incoming Fed chair.
Hale stated, “Janet Yellen's focus on what data tells us about the economy and what that means for monetary policy has guided the Federal Reserve from easing to tightening without upsetting the financial markets or the economy.”
“The emphasis on transparency and communication has helped markets and economic players predict the Federal Reserve’s actions and position accordingly,” she said.
For the housing market, Hale explained that homebuyers and sellers looking to transact in the next year would benefit from a Fed chair who maintains a similar focus on both incoming information and external communication.
“Both are vital for a smooth transition to a more normal credit environment, financial market stability and an orderly increase in mortgage interest rates,” she concluded.
Following Hale’s reasoning, the person that Trump is most likely to tap for the position on Thursday, Federal Reserve Governor Jerome Powell, doesn’t differ too much from Yellen’s opinion on the economy.
According to an article in Reuters by Steve Holland, “By picking Powell, a soft-spoken centrist and Fed governor since 2012, Trump would get the combination of a leadership change and the continuity offered by somebody who has been a part of the Yellen-run Fed that has kept the economy and markets steady in recent years.”
However, it’s not a guarantee that Trump will nominate Powell. While it’s a broad statement, what is known about the new Fed chair is that Trump says that he thinks "everyone will be very impressed."
The industry will have to wait until Thursday to see if they agree.