* Up to six U.S. policymakers could be gone by next year
* Questions over stability of longer-term policy pledges
* Rare chance for Obama to put another stamp on Fed
By Jonathan Spicer
NEW YORK, Aug 23 (Reuters) - A new chairman is just the
beginning of what could be a big leadership change at the
Federal Reserve next year, giving investors yet another reason
to second-guess the U.S. central bank's plan to scale back its
support for the economy.
Up to six officials who would otherwise vote on monetary
policy, or half of the central bank's voting ranks, could
conceivably be gone in 2014, most of them by the end of January.
Five of those, including Chairman Ben Bernanke, sit on the
Fed's seven-member Board of Governors, setting the stage for a
whole new cast of characters to run the world's most influential
central bank and giving President Barack Obama a chance to put a
big stamp on it.
The face of the Fed could be even less familiar if Bernanke
is not succeeded by Vice Chair Janet Yellen, a policy dove who
appears to be in a tight race for the top job with former
Treasury Secretary Lawrence Summers, whose views are less known.
Wholesale changes could raise questions in the marketplace
over verbal promises the Bernanke-led Fed has made to keep
interest rates low in the years ahead. Still, analysts and Fed
officials do not expect abrupt changes in the central bank's
policy path, including its plan to end a massive bond-buying
program by around mid-2014.
"All the forward guidance the Fed has put out in recent
months and years is predicated on the leadership and the people
being there," said Roberto Perli, a partner at research firm
Cornerstone Macro and a former senior officer at the central
"Having so many people changing I think is a source of
additional uncertainty in the market."
The last thing the Fed wants to do is surprise investors.
In June, officials were startled when market rates shot
higher after Bernanke said the central bank aimed to start
trimming its $85-billion-per-month in bond purchases later this
Today's policy-making Federal Open Market Committee, made up
of the seven board members, the head of the Federal Reserve Bank
of New York and four other rotating regional Fed bank
presidents, has also committed to keeping rates near zero at
least until the unemployment rate falls to 6.5 percent, as long
as inflation stays under control.
And in another pledge that would tie the hands of
successors, Bernanke has said a "strong majority" of the FOMC do
not expect to sell mortgage-based assets in the longer run.
But it is unclear whether the next generation of
policymakers will conform to the promises made in the wake of
the Great Recession, and some analysts say the uncertainty has
already pushed bond yields higher.
GOVERNORS A REFLECTION OF THE CHAIR?
Bernanke is expected to step down when his second four-year
term as chairman ends on Jan. 31. If Yellen does not get the
job, economists expect her to leave when her term as vice
chairman ends in October, even though her separate board term
does not expire until 2024.
Governor Elizabeth Duke, who joined the Fed as the financial
crisis worsened in 2008, is retiring at the end of this month,
while Governor Sarah Raskin has been nominated to take a top
post at the U.S. Treasury.
The term of Jerome Powell, a Republican who became a Fed
governor last year, also expires at the end of January, although
he could be reappointed by Obama.
Rounding out the six, Cleveland Fed President Sandra
Pianalto, who becomes an FOMC voter in 2014, has said she will
retire early next year.
The unusually heavy turnover means Obama could overhaul the
central bank even more than former President George W. Bush did
in 2006, when Bernanke replaced Alan Greenspan, two governors
left, and three more arrived.
Obama is expected to name his Fed chairman nominee this
fall. His picks for governors would likely come later and
analysts said the new chairman would probably have a big say.
Past public comments suggest a Summers-led Fed might be
somewhat quicker to raise interest rates and less likely to use
extraordinary measures such as bond-buying in the future, than
would a central bank led by Yellen.
While some are more influential than others on the direction
of policy, Fed governors almost always back their chairman. But
analysts say Summers' domineering personality could shake up the
democratic and consensus-based FOMC that Bernanke built and that
Yellen would likely continue.
"I would not be as focused on the change if Yellen came to
get the job. It's a group that's been working together a long
time," said Karim Basta, chief investment strategist at
$2-billion hedge fund III Associates.
"But if that's not the case, with over one-third a new
committee, with a new chairman, that does change things a lot."