The withdrawal of Larry Summers from the race to head the Federal Reserve caused the dollar’s value to slide on Monday and US government bonds and shares on Wall Street to rally. European stocks hit five-year highs.
Summers said he was pulling out because political opposition to him mean it would be difficult for him to be confirmed in the job by the US Congress. It is not clear if he jumped, or was pushed, that is received encouragement from the White House to remove himself from consideration.
The Fed’s Vice Chairwoman Janet Yellen is now the front-runner to
succeed Ben Bernanke, whose second four-year term will end in
Yellen is expected to continue the Fed’s likely slow, cautious approach to reduce its stimulus measures.
The White House has not yet confirmed its choice for the important changing of the guard at the top of the US central bank.
Summers’ surprise decision on Sunday came two days before the US central bank is due to meet to decide when and by how much to scale back its purchases of bonds, or quantitative easing, from the current pace of $85 billion a month.
The news on Summers is seen as having little bearing on that meeting this week.