Jeremy Stein, a member of the Federal Reserve's board of governors, resigned Thursday, saying he plans to return to his economics teaching position at Harvard.
President Obama appointed Stein, 53, to the board in May 2012 to fill an unexpired term that ends Jan. 31, 2018.
His resignation is effective May 28.
"During my time here, the economy has moved steadily back in the direction of full employment, and a number of important steps have been taken to make the financial system stronger and more resilient," Stein said in his resignation letter to Obama. "There is undoubtedly more work to be done on both dimensions."
As one of the Fed's seven governors, Stein is a voting member of the Federal Open Market Committee, the Fed's policymaking panel that decides whether to raise or lower interest rates, among other decisions.
The committee is at a critical juncture since it began to wind down a bond-buying program aimed at holding down long-term interest rates, and must determine when to start raising short-term rates. The Fed has said that's likely to occur in mid-2015.
"Jeremy has made important contributions and served as an intellectual leader during his time at the board," said Fed Chair Janet Yellen. "His understanding of monetary policy and markets as well as his expertise in banking and financial regulation has proven invaluable in his service to the Federal Reserve and the country."
The Fed's board already had two open seats after Elizabeth Duke resigned last summer and former Fed Chairman Ben Bernanke stepped down when his second term ended in January. Yellen replaced him as chairman but her previous vice chair slot is still unfilled.
President Obama has nominated Stanley Fischer, former chief of Israel's central bank, to be vice chair and Lael Brainard, former Treasury under secretary, as a board member. Both are awaiting Senate confirmation.
