By Michael S. Derby
NEW YORK (Reuters) -Anna Paulson, currently head of research at the Chicago Fed, will become the next leader of the Federal Reserve Bank of Philadelphia, the bank said Thursday.
Paulson, who is 60, will take office on July 1, replacing Patrick Harker, who retires at the end of June due to central bank rules capping service due to age. Fed rules will allow Paulson to serve for 10 years given she was selected for the job after the age of 55.
Paulson joined the Chicago Fed in 2001 and became its director of research effective 2019. Much of her research focus has been on financial issues. She holds a PhD in economics from the University of Chicago. As of 2023, the Philadelphia Fed president was paid a $481,000 annual salary.
Outgoing Philadelphia chief Harker, a former engineer, university leader and a one-time Federal Bureau of Investigation special assistant, was known for taking a pragmatic approach to policy making. He took office in 2015 and bolstered the institution’s work on issues like the intersection of universities and hospitals on local communities.
Paulson is set to join the bank at a fraught time. It faces major economic challenges while wrangling with President Donald Trump, who on Thursday mused about “termination” of Fed Chairman Jerome Powell’s leadership role.
Trump’s huge trade tariffs have added considerable uncertainty to the outlook, unsettled asset prices and called into question U.S. markets as a global safe haven, amid expectations the import tax surge will drive up already high inflation and unemployment while depressing growth.
Fed officials have been flagging the significant challenges of this economic landscape, as this mix of economic developments does not argue for a clear policy response.
MARKET MAVENS
In a statement announcing Paulson’s selection, Anthony Ibargüen, chair of the Philadelphia Fed’s board of directors, said over 20 years Paulson “has demonstrated a strong commitment to the Federal Reserve’s dual mandate of price stability and maximum employment.” He added,“her expansive technical expertise and mission-driven focus will be a tremendous asset to the Philadelphia Fed and the communities it serves.”
Paulson’s financial markets expertise comes as the bench of officials at the central bank with interest in that key part of the economy has grown.
Among recent picks to lead Fed banks, the current chiefs of the Cleveland and St. Louis Fed banks have robust market experience, while the Dallas Fed leader once led the technical work of implementing monetary policy at the New York Fed. Meanwhile, Minneapolis Fed President Neel Kashkari led a key government bailout program during the financial crisis.
Regional Fed research director roles have also been regular stepping stones to higher positions in the Fed. San Francisco Fed leader Mary Daly held a similar role before her elevation, while Fed Governor Christopher Waller’s prior position was leading the research arm of the St. Louis Fed.
Regional Fed presidents lead quasi-private institutions technically owned by member banks that operate with boards of directors comprised of local leaders, under the oversight of the central bank’s Board of Governors in Washington.
Regional Fed banks operate various services for the central bank, collect local economic intelligence, house banking regulators, with leaders participating in helping the Federal Open Market Committee to set monetary policy.
According to the rotation of regional bank presidents on the FOMC, Paulson will get a vote on interest rate policy next year.
Unlike Fed governors and chairs, regional Fed bank presidents are not selected by presidents and confirmed by the Senate. The process to pick regional Fed leaders has often been criticized for its opacity.
(Reporting by Michael S. Derby; Editing by Chizu Nomiyama)
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