Stephen H. Axilrod, the Federal Reserve's staff director for monetary and financial policy, has resigned to become vice chairman of the American office of Nikko Securities Co. International, a subsidiary of a large Japanese securities firm.
Axilrod, 60, is generally regarded as the Fed's most powerful staff member, but a number of financial analysts said they doubt that his departure will have a significant impact on the course of monetary policy.
No successor has been named, and it is possible that all of Axilrod's current responsibilities might not remain with a single individual.
Nikko Securities Co. International is one of several Japanese-owned securities firms that have been expanding their U.S. operations rapidly. One reason has been the sharp rise in Japanese investment in the United States, particularly in U.S. Treasury securities.
Hiring Axilrod provides Nikko with "instant credibility" in U.S. financial circles, said one analyst.
Axilrod indicated that he would not become a "Fed watcher" for the firm, a term describing analysts who specialize in scrutinizing Federal Reserve actions, statements by Fed officials and other such information for clues to the future course of interest rates.
He also said that he would not be involved in Nikko's efforts to become one of three dozen or so "primary" dealers in U.S. government securities. The New York Federal Reserve Bank uses the primary dealers when it implements Fed policy by buying and selling such securities to influence the amount of cash available to the nation's banking system. At least 15 firms, several of which are foreign owned, are seeking to join the select group of primary dealers.
Prior to each meeting of the Fed's policy-making group, the Federal Open Market Committee, or FOMC, Axilrod and his small staff prepare the so-called "blue book," which includes an analysis of the economic outlook and three options for monetary policy. Those options, A, B and C, always include one for an easier policy, one for a tighter policy and one in which policy is unchanged.
These options serve only as a starting point for FOMC policy discussions and rarely, if ever, are any of them adopted in their entirety.
Axilrod, who will leave the Fed next month, has worked at the central bank since 1952.
He agreed on Friday to take his new job with Nikko, and Federal Reserve Chairman Paul A. Volcker announced it to the Fed staff on Monday. As is traditional when Fed officials in policy-level jobs have accepted other jobs but not departed, Axilrod will no longer participate in policy discussions and decisions, including the next meeting of the FOMC on July 8 and 9. His deputy, Donald L. Kohn, will take over his duties until a successor is picked.