WASHINGTON: US President Joe Biden on Monday nominated Federal Reserve Chair Jerome Powell for a second four-year term, extending a tenure that began somewhat by chance, survived blistering criticism from former President Donald Trump, and now positions the ex-investment banker to continue the most consequential revamp of monetary policy since the 1970s.
Lael Brainard, the Federal Reserve board member who was the other top candidate for the job, will be vice chair, the White House said.
Combined, the nominations pair two monetary policy veterans and collaborators on a recent overhaul of Fed policy, which shifted the emphasis to jobs from the preeminent focus on inflation established some four decades ago, to steer the United States through a period of unexpectedly strong price gains while also hoping to keep job growth underway.
“While there’s still more to be done, we’ve made remarkable progress over the last 10 months in getting Americans back to work and getting our economy moving again,” Biden, a Democrat, said in comments emailed to reporters.
“That success is a testament to the economic agenda I’ve pursued and to the decisive action that the Federal Reserve has taken,” he said.
S&P, Nasdaq hit record highs after Powell nomination seen as safe bet
Powell, 68, and Brainard, 59, will both need to be confirmed in their Fed leadership roles by the Senate, currently controlled by Biden’s Democratic party but closely divided.
“This is a well-justified continuation of what has been a successful, non-partisan monetary policy,” that carried the United States through the coronavirus crisis, said Adam Posen, president of the Peterson Institute for International Economics.
“And it gives potentially non-partisan credibility to a more realistic assessment of inflation risks...They are veterans and mature public servants and there has been very little difference between them.” That reassessment could mean interest rate increases coming sooner than later if inflation proves more persistent than expected.
US stocks hit record highs after the news. Treasury bond yields also rose and the dollar strengthened. Powell’s reappointment had been encouraged by a cross-section of investors and economists with both conservative and liberal leanings.
But controversy over stock trading during the pandemic by two former regional Federal Reserve bank presidents roiled the renomination process with calls for broader reform. Powell pivoted fast, quickly rolling out new ethics rules for top Fed officials far stricter even than the ones his critics in Congress apply to themselves.
His swift and aggressive actions at the start of the coronavirus pandemic in early 2020 were widely hailed as staving off a potential Depression. Later, some lauded his focus on jobs in the new policy framework launched just over a year ago, and others argued it would be too risky to oust the Fed chair during a sensitive transition from the emergency measures taken during the health crisis.
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