Fed board member Stein announces resignation

In a letter to President Barack Obama, Stein says that he will resign effective May 28 and return to Harvard, where he had been an economics professor since 2000. Stein had been on the seven-member Fed board since 2012.

Stein's departure will mean one more vacancy for Obama to fill. Currently, there are three Obama nominations pending before the Senate including Stanley Fischer, who Obama has nominated as vice chairman, succeeding Janet Yellen. In February, Yellen became Fed chair, the first woman to hold the position in the Fed's 100 year history.

Obama has also nominated Lael Brainard, who served as Treasury undersecretary for international affairs during Obama's first term, and Jerome Powell, a Republican, who Obama has nominated for another term of the Fed board.

Obama will now need to select a replacement for Stein as well as a replacement for Elizabeth Duke, who left the board last year.

The departures have given Obama the chance to reshape the seven-member board but analysts expect the Fed's basic approach is unlikely to change significantly. Yellen was a close ally of former Fed Chairman Ben Bernanke in his efforts to revive the economy following the Great Recession of 2007-2009 and Obama's picks for the board vacancies have endorsed that approach.

The Fed began trimming its monthly bond purchases in December and in March, under Yellen's leadership, approved a third $10 billion reduction, bringing new purchases down to $55 billion in April. Analysts expect the new bond purchases will be phased out by the end of this year.

While the new purchases will be phased out, the Fed will still have a record level of bond holdings above $4 trillion and Fed officials have said they expect to keep bond holdings at that level for the foreseeable future. Those holdings are designed to keep long-term interest rates low to spur economic growth.

Yellen, in a speech Monday, sent a strong signal that the Fed will keep a key short-term interest rate at a record low near zero for a considerable period of time because of her belief that the labor market is still a long way from being healthy. The Fed's benchmark for short-term rates has been near zero since December 2008.