Powell will replace current chair Janet Yellen, who took office in February 2014 on a four-year term, ending in February 2018.
Powell joined the Federal Reserve’s board of governors in 2012 and was reappointed in 2014 on a 14-year term. He is considered to be a centrist and pragmatist, according to colleagues.
The Senate will now vote to ratify President Trump’s choice, before Powell can take office.
Prior to joining the Fed, Powell served as an assistant secretary and as undersecretary in the Treasury under President George Bush, responsible for policy on the financial institutions and the Treasury debt market.
A trained lawyer, Powell partnered at The Carlyle Group from 1997 to 2005. Before joining the Bush Administration, he worked as a lawyer and investment banker in New York.
Commenting on the appointment, Kenneth Bentsen, president and CEO of The Securities Industry and Financial Markets Authority (SIFMA), said: “Governor Powell's tenure and experience at the Federal Reserve, Treasury, and in the industry should give markets and investors great confidence that he will provide a steady hand in guiding this critical function.”
Yellen, who welcomed the appointment of Powell, will become the first chair in 40 years not to be selected for a second term, despite falling unemployment and stable inflation rates during her tenure.
In a statement, Powell said: “In the years since the global financial crisis ended, our economy has made substantial progress toward full recovery. By many measures we are close to full employment, and inflation has gradually moved up toward our target.”
Powell added: “Our financial system is without doubt far stronger and more resilient than it was before the crisis. Our banks have much higher capital and liquidity, are more aware of the risks they run, and are better able to manage those risks.”
“While post-crisis improvements in regulation and supervision have helped us to achieve these gains, I will continue to work with my colleagues to ensure that the Federal Reserve remains vigilant and prepared to respond to changes in markets and evolving risks.”