Federal Reserve chair Janet Yellen is to step down as a member of the central bank's board of governors once her successor Jerome Powell is sworn in as chair.
Yellen has been on the Fed board since 2004, when she became president of the Federal Reserve Bank of San Francisco. She became vice chair in October 2010, a position she held until February 2014 when she took over as chair from Ben Bernanke.
Her four-year term as chair of the board ends in February 2018 when Powell will take over.
‘As I prepare to leave the board, I am gratified that the financial system is much stronger than a decade ago, better able to withstand future bouts of instability and continue supporting the economic aspirations of American family and businesses,’ Yellen wrote in her resignation letter to president Donald Trump.
‘I am also gratified by the substantial improvement in the economy since the crisis.’
Her resignation brings to an end Yellen's second spell on the Fed board. She was first appointed in 1994 by Bill Clinton, serving until February 1997, when she resigned to become an economic advisor to the president.
By not sitting for a second term Yellen became the shortest-serving Fed chair since G. William Miller who held the position from 1978 to 1979.
Earlier in the month, Trump nominated Powell, who currently serve as a member of the Fed’s board of governors, to succeed Yellen as chair.
Yellen’s departure will leave four open seats to fill on the central bank's board of governors. The president’s nominee Randal Quarles has recently been confirmed by the Senate for one of these positions, but that still leaves three vacancies.
TCW manager Bryan Whalen recently warned that many investors had underappreciated what this change in line-up could mean for monetary policy in the US.