Complicating matters even further for the former private-equity executive is that growth since the Great Recession ended in 2009 is only slowly closing an economic divide that’s fueled the political populism that elected the man who picked him. The gap between rich and poor could widen further if stocks keep climbing and wage growth stays moderate.

“The conflict between getting inflation up to target and restraining the asset price bubble is the biggest challenge,” said Paul Mortimer-Lee, chief economist for North America at BNP Paribas SA in New York. “One says monetary policy is too tight, and the other says it is too slack,” he added. “That is a terrible dilemma.”

An ex-Treasury undersecretary and former Carlyle Group LP managing director, Powell would be taking charge in the midst of a political battle over how much stimulus the economy needs.

“The era of a bipartisan, or technocratic Federal Reserve is gone,” said Mark Spindel, a co-author of a book on the central bank’s relationship with Congress. Powell “will be caught in a very difficult position between a blame-avoiding Congress, an outspoken president and potentially unruly committee.”

Republicans are debating tax cuts, a move that could add even more demand to the economy, and officials only have blunt tools to tamper down frothy markets.

Meanwhile, for those with savings to invest, stock indexes are touching record highs. Trump has touted soaring equities as a sign of his success. No stock rally lasts forever, and Fed officials will only worry more if savings rates decline, and consumption and investment boom on the back of asset wealth. Enthusiasm can contract suddenly when asset markets turn lower.

One of Powell’s virtues for the job is that he understands markets. He spent much of his career working in the financial industry, first at investment bank Dillon Read & Co. and later at Carlyle. That career path also made him a multi-millionaire.

To sustain the expansion, Yellen has gradually tightened monetary policy to allow a strong labor market to lift wages and pricing power. But wages are responding slowly, in part because worker output per hour, or productivity, is low.

Recession Arsenal

It’s a complicated problem and one that has left Powell with yet another risk. The Fed’s benchmark lending rate is now in a range of 1 percent to 1.25 percent, and current Fed forecasts suggest it will only be around 2 percent by the end of next year.