Cleveland Fed head to step down, adding to central bank turnover

WASHINGTON -- The president of the Federal Reserve Bank of Cleveland, Sandra Pianalto, will step down early next year, creating another vacancy among central bank policymakers as they grapple with reducing their stimulus efforts.

The head of the Cleveland Fed is set to take one of four rotating positions as a voting member on the 12-person Federal Open Market Committee, which makes monetary policy decisions.


Pianalto, who has led the Cleveland Fed since 2003, said Thursday she would retire early next year. She is the third high-ranking woman at the Fed slated to depart in the coming months.

Fed Governor Elizabeth Duke said in July she would step down at the end of August. Another Fed governor, Sarah Bloom Raskin, has been nominated by President Obama to be deputy Treasury secretary and likely would step down after her expected confirmation.

The seven Fed governors all are voting members of the Federal Open Market Committee.

In addition, Ben S. Bernanke's second four-year term as chairman expires Jan. 31 and he is not expected to seek reappointment. His term on the Fed board lasts until 2020, but he is not likely to remain after stepping down as chairman.

Fed Governor Jerome H. Powell's term also ends on Jan. 31, though he could stay until a successor is confirmed.

And the future of the Fed's highest-ranking woman, Vice Chair Janet L. Yellen, also could be in doubt.

White House officials have said Yellen is one of the front-runners to replace Bernanke, along with former Treasury Secretary Lawrence H. Summers. If Yellen is not nominated by President Obama, she could decide to depart as well.

The departures from the Fed board would give Obama an opportunity to continue to reshape it with several new appointments, particularly his choice as chairman.

Obama does not appoint presidents of the 12 regional Fed banks. They area appointed by each bank's board of directors, subject to approval by the Fed Board of Governors.

Pianalto has served as head of the Cleveland Fed since 2003. She is viewed as a centrist on the policymaking open market committee and is a nonvoting member this year.

In a speech Wednesday, Pianalto said that she was ready to start reducing the central bank's $85 billion in monthly bond purchases because of improving economic conditions.

"In light of this progress, and if the labor market remains on the stronger path that it has followed since last fall, then I would be prepared to scale back the monthly pace of asset purchases," she told the Center for Community Solutions Annual Human Services Institute in Cleveland.