In naming William J. McDonough as the new president of the Federal Reserve Bank of New York, the bank's search committee picked a banker very much in the mold of his predecessor, E. Gerald Corrigan.

The appointment of Mr. McDonough, 59, to the second-most-powerful position in the Federal Reserve System, was announced on Friday.

Mr. McDonough, who assumes the post today, spent most of his career at First Chicago Corp., where he rose to the level of vice chairman. After leaving the bank, he was recruited by Mr. Corrigan to join the New York Fed. He arrived in January 1992 as executive vice president in charge of the foreign desk, which oversees the Treasury Department's foreign exchange trading operations.

Field of 60 Candidates

Mr. McDonough was one of 50 candidates considered by the bank's search committee, said Ellen V. Futter, chairman of the New York Fed board of directors. He was chosen for his "broad-based knowledge of the workings of financial institutions and financial markets, both nationally and internationally," said Ms. Futter at a new conference.

Mr. McDonough is expected to follow Mr. Corrigan's views on monetary policy. Though somewhat more centrist on inflation, he would make preemptive strikes if inflation were to rise, said David G. Jones, a Fed watcher at Aubrey G. Lanston & Co.

Not an Inflation Hawk

Mr. McDonough said he will push for sustained economic growth through price stability and low levels of inflation, but added that he is not a hawk.

"A hawk is someone who says zero inflation is necessary," said Mr. McDonough at a news conference. "The data are not so precise that there is a magic number."

Mr. McDonough, whose appointment was announced two days after the Clinton administration unveiled an effort to encourage community development loans, said economic growth in the inner city will be one of his priorities at the New York Fed.

"We all need sustained growth and financial stability, but many of the people in the urban centers need it more," said Mr. McDonough, a native of Chicago. "I hope to have this institution work at it very actively."

International Experience

Mr. McDonough was handed additional Fed responsibility last year when the bank merged the foreign desk with its influential open market group, which conducts reserve operations and implements the monetary policy of the Federal Open Market Committee.

"He's exactly the kind of person that Alan Greenspan wants in a Fed president," said Mr. Jones. "He's a strong international banker and a strong leader."

Mr. McDonough, however, is untested in the operational areas where Mr. Corrigan proved himself.

"He can easily step into Corrigan's shoes," said Mr. Jones. "The only places where Corrigan will be hard to replace is in crisis management and the payment systems. No one knew the nuts and bolts of the payment system like Corrigan."

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