Wednesday evening, the White House notified Federal Reserve Governor Jerome Powell that President Donald Trump intends to nominate him as the next Federal Reserve Chair Thursday morning, according to multiple media outlets (first reported by the Wall Street Journal).
News of Trump's preference for Powell began to trickle out earlier this week.
This decision comes after weeks of anticipation from the housing market as to who will lead the Fed through next year’s anticipated four rate hikes.
It is forecasted Powell, who will replace current Fed Chair Janet Yellen after her term ends in 2018, aligns closely with the current Fed chair’s outlook on interest rates, however he is much more open to loosening financial regulations.
“The president’s nominee for the next Chair of the Federal Reserve will play a critical – if indirect – role in housing affordability through the end of this decade and maybe beyond,” Zillow Chief Economist Svenja Gudell said of Powell's expected nomination.
“Over the next four years, the Fed Chair will likely oversee a historic increase in interest rates, pushing them to levels not seen in a decade, which will increase how much Americans pay to borrow money to buy a home,” Gudell continued.
“A decade after the financial crisis, mortgage interest rates remain near historic lows, contributing to a booming housing market – particularly in the parts of the country with the strongest local labor markets,” Gudell said. “If and when rates rise alongside housing costs, and assuming income growth fails to keep pace, buyers on already stretched budgets could find it marginally more difficult to afford a home – especially in a handful of pricey markets.”
But she explained that Powell will just be one voice out of nine on the committee that sets short-term interest rates. Powell, along with the other Fed members, will shape the path of interest rates, Gudell said.
However, not every expert agrees with the significance the new Federal Reserve chair will have on the housing market. Experts from Capital Economics predicted 2018 will see four increases to the Federal Funds rate, regardless of the next Fed chair.