Mitt Romney’s promise to replace Federal Reserve Chairman Ben Bernanke if elected president is stirring anxiety among some financial analysts — who fear such a move could send the nation’s markets tumbling.
Romney, throughout his White House campaign, has argued he knows what needs to be done to get the economy running at full steam.
But the concern among market watchers is that if Romney dumps Bernanke, whose term expires at the beginning of 2014, he would remove the person who some believe is the weak economy’s primary lifeline.
“There’s a view that the economy cannot sustain itself, that it’s really the Fed that is fueling economic growth, and that a post-Bernanke Fed is just not as favorable to growth,” said Brian Gardner, senior vice president of Washington research at Keefe, Bruyette and Woods.
Gardner wrote in a note to clients Thursday that a Romney win could lead to a market decline, operating on the premise that Bernanke’s vow of long-term economic stimulus would then be short-lived.
The Fed chairman has not won any friends among Republicans for his efforts to boost the economy, which have included three rounds of “quantitative easing.”
The massive bond purchases have sent stock markets soaring, but conservatives fret that the Fed’s rapidly-expanding portfolio is going to be a nightmare to unwind and could result in severe inflation.
Bernanke’s Fed agreed in September to buy $40 billion of mortgage bonds a month, and to continue doing so even after the labor market picks up the pace.
The Fed has also stated it expects to keep interest rates near zero until mid-2015.
But a Romney win could throw those plans into question, and signal to markets that the days of easy money are dwindling.