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Federal Reserve: Susan Collins selected as Boston Fed president

Yahoo Finance Live's Brian Cheung reports Susan Collins has been selected as the Boston Fed president.

Video Transcript

JARED BLIKRE: Welcome back. We have a little bit of breaking news here to begin the hour. And this is regarding the Boston Fed president. We want to bring in Yahoo Finance's Brian Cheung, who has all the details. Brian.

BRIAN CHEUNG: Hey, Jared. Well, the Federal Reserve will be getting a new face to its cast of critical policymakers as inflation and the variant of the virus continue to weigh on the economy. Susan Collins, who's currently at the University of Michigan, has been picked by the Boston Fed to be its next president.

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She will be replacing Eric Rosengren, who people will recall will step down at the end of September last year in the wake of a trading scandal that involved him making many large transactions in real estate investment trusts and other types of securities over the course of 2020. He resigned citing a worsening kidney condition. And interim president Kenneth Montgomery has been taking his place since then. But Susan Collins will be the permanent pick come July 1. That's when she will take on the role. So Kenneth Montgomery serving in that interim role will continue to serve there at least for the next few months.

But a little bit more about Susan Collins. She's an international macro economist currently at the University of Michigan. She is the provost and executive vice president. She's been doing a lot of budget-related things for the university, a very large one at that. Prior to that, she was a professor of economics at the Ford School at the University of Michigan, but is also a familiar face within the Federal Reserve. She worked for nine years as a director at the Chicago Fed. And she's even been a familiar face at Fed conferences as of late.

Actually, I had the chance to interview her at a conference in Chicago in 2019. When the Fed was reviewing its framework, she was advocating for perhaps a more aggressive approach to how the Federal Reserve looks at maximum employment, perhaps tolerating more periods of higher inflation, which is effectively what the Fed actually did after it finished its review. But all those things are aside from the point. She will be the new president of the Boston Fed.

And by the way, she'll be the first Black woman to ever hold a Federal Reserve bank post. Raphael Bostic was the first Black man. But there has not been a Black woman in either a Fed governor or a Federal Reserve bank role. So this is also a very notable moment in Fed history as well. So again, Susan Collins from the University of Michigan set to take on new Boston Fed role come July, guys.

ALEXIS CHRISTOFOROUS: And it looks like President Biden stuck to his promise, right? He said that he would name the first female Black Fed president, and there you go. But I'm wondering if Susan Collins will be another dovish voice for the Fed? Will she be more of a hawkish voice? And then how many more seats does Biden need to fill there?

BRIAN CHEUNG: Yeah, just one quick point here is that this is a reserve bank president role, which is a bit separate from the governor roles that are based down in DC, because Susan Collins will be taking on that regional post in Boston. This is not a Senate confirmed role, which means that there is no requirement for her to get any sort of vetting from Congress down in DC. She will be the person taking on this role come July 1.

This is because of the pseudo government structure of the Federal Reserve banks. Any Fed governor role that's based out of the official federal agency of the Federal Reserve in DC does require Senate confirmation. But the 12 reserve banks around the country are actually pseudo government. They're actually technically private. So that's the reason why the bank's board of directors was able to pick her and it doesn't require Senate confirmation.

But as far as the dovish hawkish bit, yeah, our conversation that we had in 2019, she had advocated for maybe the Federal Reserve could have actually raised its inflation target to 3%, which is a pretty radical idea and could kind of signal an underpinning of, or an unpinning rather, of gradually kind of anchored inflation targets around the world. Of course, that didn't happen. That's not going to happen, but it does kind of signal she's someone that would like to be a little bit more emphasized on the maximum employment side of things than the inflation side of things. Certainly a very difficult message, especially right now with inflation as high as it is.

JARED BLIKRE: As high as it is, and we're giving it another read tomorrow morning. I'm guessing it's going to be the highest inflation print-- can you guess what I'm going to say-- in young Brian Cheung's lifetime.

BRIAN CHEUNG: Oh, boy.

JARED BLIKRE: Yahoo Finance's Brian Cheung, thank you for joining us. Thank you for that report here.