President Trump's likely Fed chief nominee sticks to business in speech

NEW YORK, Nov 2 (Reuters) - Jerome Powell, who is expected to take the reins of the Federal Reserve in 2018, said on Thursday that Wall Street's transition from the London interbank offered rate, or Libor, to more robust reference rates will be complicated and costly but likely necessary.

In a pre-recorded video address from Washington, the Fed governor focused on the business of regulating banks even while markets focus on how he would run the world's most powerful central bank. President Donald Trump is expected on Thursday afternoon to name him as the successor to Fed Chair Janet Yellen.

Jerome Powell through the years

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Jerome Powell through the years
FILE: Jerome Powell, governor of the U.S. Federal Reserve, stands for a photograph at the board's headquarters in Washington, D.C., U.S., on Thursday, April 13, 2017. With the White House scheduling an announcement for 3 p.m. in Washington on Thursday, U.S. President Donald Trump will announce Powell, 64, as his nominee to be Federal Reserve chairman, said several people familiar with the decision, replacing Chair Janet Yellen when her term expires in February. Our editors select the best archive images of Jerome Powell. Photographer: T.J. Kirkpatrick/Bloomberg via Getty Images
FILE: Jerome Powell, governor of the U.S. Federal Reserve, stands for a photograph at the board's headquarters in Washington, D.C., U.S., on Thursday, April 13, 2017. With the White House scheduling an announcement for 3 p.m. in Washington on Thursday, U.S. President Donald Trump will announce Powell, 64, as his nominee to be Federal Reserve chairman, said several people familiar with the decision, replacing Chair Janet Yellen when her term expires in February. Our editors select the best archive images of Jerome Powell. Photographer: T.J. Kirkpatrick/Bloomberg via Getty Images
Jerome H. Powell, a governor on the board of the Federal Reserve System, prepares to testify to the Senate Banking Committee on Capitol Hill in Washington, U.S., June 22, 2017. REUTERS/Joshua Roberts
Federal Reserve Board Governor Jerome Powell discusses financial regulation in Washington, U.S., October 3, 2017. REUTERS/Joshua Roberts
Jerome H. Powell, a governor on the board of the Federal Reserve System, prepares to testify to the Senate Banking Committee on Capitol Hill in Washington, U.S., June 22, 2017. REUTERS/Joshua Roberts
Jerome H. Powell, a governor on the board of the Federal Reserve System, prepares to testify to the Senate Banking Committee on Capitol Hill in Washington, U.S., June 22, 2017. REUTERS/Joshua Roberts
Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarlo, Federal Reserve Board Governor Jerome Powell and moderator Reuters columnist Gina Chon discuss financial regulation in Washington, U.S., October 3, 2017. REUTERS/Joshua Roberts
Federal Reserve Governor Jerome Powell attends the Federal Reserve Bank of Kansas City's annual Jackson Hole Economic Policy Symposium in Jackson Hole, Wyoming August 28, 2015. REUTERS/Jonathan Crosby
Federal Reserve Governor Jerome Powell delivers remarks during a conference at the Brookings Institution in Washington August 3, 2015. REUTERS/Carlos Barria
Federal Reserve Governor Jerome Powell attends a conference at the Brookings Institution in Washington August 3, 2015. REUTERS/Carlos Barria
U.S. Federal Reserve Chair Janet Yellen (L) congratulates Fed Governor Jerome Powell at his swearing-in ceremony for a new term on the Fed's board, in Washington in this handout photo taken and released June 16, 2014. REUTERS/U.S. Federal Reserve/Handout via Reuters (UNITED STATES - Tags: POLITICS BUSINESS) ATTENTION EDITORS - FOR EDITORIAL USE ONLY. NOT FOR SALE FOR MARKETING OR ADVERTISING CAMPAIGNS. THIS PICTURE WAS PROVIDED BY A THIRD PARTY. REUTERS IS UNABLE TO INDEPENDENTLY VERIFY THE AUTHENTICITY, CONTENT, LOCATION OR DATE OF THIS IMAGE. THIS PICTURE IS DISTRIBUTED EXACTLY AS RECEIVED BY REUTERS, AS A SERVICE TO CLIENTS
Federal Reserve Board Governors Jeremy Stein (L) and Jerome Powell attend the swearing in of new Federal Reserve Board Chairwoman Janet Yellen at the Federal Reserve Board in Washington, February 3, 2014. REUTERS/Jim Bourg (UNITED STATES - Tags: BUSINESS POLITICS)
Federal Reserve Board of Governors member Jerome Powell listens during an open board meeting at the Federal Reserve in Washington December 14, 2012. REUTERS/Kevin Lamarque (UNITED STATES - Tags: POLITICS BUSINESS)
Federal Reserve Board of Governors member Jerome Powell listens during an open board meeting at the Federal Reserve in Washington December 14, 2012. REUTERS/Kevin Lamarque (UNITED STATES - Tags: POLITICS BUSINESS)
Elissa Leonard looks on as her husband Jerome Powell is sworn in as a member of the Federal Reserve's Board of Governors by Chairman Ben Bernanke in Washington in this Federal Reserve System handout photo dated May 25, 2012. The former investment banker and U.S. Treasury official is due to fill a term expiring Jan. 31, 2014. REUTERS/Federal Reserve System/Handout (UNITED STATES - Tags: BUSINESS POLITICS) FOR EDITORIAL USE ONLY. NOT FOR SALE FOR MARKETING OR ADVERTISING CAMPAIGNS. THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. IT IS DISTRIBUTED, EXACTLY AS RECEIVED BY REUTERS, AS A SERVICE TO CLIENTS
Jerome Powell, governor of the U.S. Federal Reserve, left, shakes hands with Terry Lundgren, chairman of The Economic Club of New York and executive chairman of Macy's Inc., after speaking at an Economic Club of New York event in New York, U.S., on Thursday, June 1, 2017. Powell�is calling for gradual interest rate increases and a start to balance-sheet reductions later this year if the economy stays on track, though hes watching a recent slowdown in inflation. Photographer: Michael Nagle/Bloomberg via Getty Images
Jerome Powell, governor of the U.S. Federal Reserve, speaks during an Economic Club of New York event in New York, U.S., on Thursday, June 1, 2017. Powell�is calling for gradual interest rate increases and a start to balance-sheet reductions later this year if the economy stays on track, though hes watching a recent slowdown in inflation. Photographer: Michael Nagle/Bloomberg via Getty Images
Daniel Tarullo, left, and Jerome Powell, governors of the U.S. Federal Reserve, talk before the start of a meeting of the Board of Governors of the Federal Reserve in Washington, D.C., U.S., on Monday, Nov. 30, 2015. The Federal Reserve took the final step to ensure it can't repeat the extraordinary steps taken to rescue American International Group Inc. and Bear Stearns Cos. in 2008, adopting formal restrictions on its ability to help failing financial firms. Photographer: Andrew Harrer/Bloomberg via Getty Images
Jeremy Stein, nominee to be a member of the board of governors with the U.S. Federal Reserve, right, listens to fellow nominee Jerome Powell speak during a Senate Banking Committee hearing in Washington, D.C., U.S., on Tuesday, March 20, 2012. Federal Reserve Chairman Ben S. Bernanke stands to gain two lieutenants with expertise on financial markets if the Senate confirms President Barack Obama's nominees to the Board of Governors. Photographer: Andrew Harrer/Bloomberg via Getty Images
Jerome Powell, nominee to be a member of the board of governors with the U.S. Federal Reserve, left, speaks during a Senate Banking Committee hearing with fellow nominee Jeremy Stein in Washington, D.C., U.S., on Tuesday, March 20, 2012. Federal Reserve Chairman Ben S. Bernanke stands to gain two lieutenants with expertise on financial markets if the Senate confirms President Barack Obama's nominees to the Board of Governors. Photographer: Andrew Harrer/Bloomberg via Getty Images
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After apologizing for not being able to attend the New York conference in person, Powell said the transition from Libor will "involve significant costs" for broker-dealers and others who rely on it. Yet it would likely be necessary after some of the world's biggest banks were found to have manipulated Libor in recent years, setting up a 2021 deadline for a new system.

"We have to acknowledge that the transition will be complicated. Unfortunately, as I have discussed, we cannot guarantee that it won't be necessary," Powell, a soft-spoken centrist who has been a Fed governor since 2012, told the gathering of market participants. "Despite those complications and costs, a transition may prove necessary."

RELATED: Trump's potential selections for next Fed chair

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Trump's potential selections for next Fed chair

Janet Yellen, current chair of the U.S. Federal Reserve

(Andrew Harrer/Bloomberg via Getty Images)

Kevin Warsh, former governor of the U.S. Federal Reserve board

(Chris Ratcliffe/Bloomberg via Getty Images)

Stanford University economist and former US Treasury official John B. Taylor.

(Photo by Susana Gonzalez/Bloomberg via Getty Images)

White House chief economic adviser Gary Cohn

(REUTERS/Yuri Gripas)

Jerome H. Powell, a governor on the board of the Federal Reserve System

(REUTERS/Joshua Roberts)

A combination photo of the five U.S. Federal Reserve Chair contenders: Kevin Warsh (L to R), John Taylor, Gary Cohn, Jerome Powell and present chair Janet Yellen in Washington, D.C. REUTERS/Staff/Stringer/File Photos
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The conference was hosted by the Alternative Reference Rates Committee (ARRC), which was tasked with selecting a new rate at the behest of regulators including the Fed who worried that a decline in short-term bank lending since the 2008 financial crisis undermined faith in Libor, and posed risks to the trillions of dollars of derivatives backed by the rate.

Britain has said a substitute for Libor must be in place by the end of 2021.

"Libor may remain viable well past 2021, but we do not think that market participants can safely assume that it will," said Powell, the Fed's point person on the issue. "Users of Libor must now take into account the risk that it may not always be published."

Powell emerged as the front-runner for the top Fed job after a months-long search for a nominee. He would need Senate confirmation to replace Yellen, whose term expires in early February.

(Reporting by Jonathan Spicer; Editing by Paul Simao)

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