By Paul Kiernan 

WASHINGTON -- The Federal Reserve Board said its head economist will retire at the end of 2018, in what would be the most significant change in a senior staff position since Chairman Jerome Powell took office in February.

David Wilcox plans to step down after a seven-year stint as director of research and statistics at the Fed board and 30 years of total service at the central bank, the board said in a statement. A search for his successor will begin later this year.

As research director, Mr. Wilcox has fulfilled one of the most important roles at the central bank outside the committee that votes to set interest rates. The Fed's research director is responsible for briefing the committee on the outlook for the U.S. economy, overseeing 350 employees who produce analysis and forecasting of the domestic economy and financial markets.

Staff economists at the Fed produced overly optimistic forecasts for U.S. economic growth during the earlier years of Mr. Wilcox's tenure. Last year, however, they correctly predicted that an inflation slowdown would prove temporary, a key projection that encouraged officials to continue raising rates even though inflation was below the 2% target.

Had the Fed waited to raise rates, inflation, which in recent months has crept slightly above-target, could have accelerated too much. That likely would have forced the Fed to act more aggressively, potentially harming the economy.

"David's depth of expertise and wise counsel have helped guide the Federal Reserve through a time of unprecedented challenges," Mr. Powell said in a statement. "We will miss his prowess as an economist, his leadership in promoting diversity and inclusion in the field of economics, as well as his incomparable wit and good humor."

Write to Paul Kiernan at paul.kiernan@wsj.com

(END) Dow Jones Newswires

August 20, 2018 11:55 ET (15:55 GMT)