tapering

Taper advocate to leave the Fed

April 3, 2014: 11:47 AM ET

With Jeremy Stein's departure, the Federal Reserve loses a big supporter of winding down stimulus.

Fed governor Jeremy Stein

Fed governor Jeremy Stein

FORTUNE -- One less taperer is in the house.

One of the Federal Reserve's more vocal advocates of the need to reduce monetary stimulus is leaving the U.S. central bank.

On Thursday, Jeremy Stein announced that he plans to leave the Fed in late May to return to Harvard University, where he teaches economics.

Stein has been a Fed governor since May 2012. He joined the Fed from Harvard, and the university has a strict two-year leave policy. But Stein's Fed appointment ends in 2018, so his departure is somewhat of a surprise. He is also the first Fed governor to resign since Janet Yellen took over the top job at the Fed earlier this year.

There was nothing in Stein's resignation letter to suggest he is leaving because of policy differences with others at the Fed, which has so far stuck to its plan to wind down bond purchases. In his letter, Stein said that the economy continues to improve and that the financial system has become "stronger and more resilient," but that there was more work to be done.

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Even so, Stein's departure means the Fed will have one less advocate for continuing to wind down stimulus at a time when the weakness of the economy in the first quarter has surprised some economists, though many have blamed the recent weakness on the weather.

Stein never dissented from the majority during his tenure at the Fed, including going along with the vote to increase the Fed's bond-buying effort back in late 2012. And he sided with Ben Bernanke last September when the former Fed chair initially decided to put off the tapering of the central bank's bond buying program, before deciding to do so in December.

But back in February 2013, Stein made a speech in which he said the Fed's effort to stimulate the economy by buying bonds and driving down interest rates seemed to be creating new financial bubbles. Prices of high-yield bonds, one of the areas that Stein said he was concerned about, have continued to rise. Last month, Stein gave a speech in which he once again said the Fed should balance the needs of the economy with the dangers of causing new investment bubbles.

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