Jay Powell Nominated For Second Term as Fed Chair by Biden
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Jay Powell has been nominated by president Joe Biden to serve a second term as chair of the US Federal Reserve. Lael Brainard is being nominated as the vice chair of the Fed board.
Rumors that Lael Brainard may have been in the frame for the job, but Biden appears to have opted for the safe approach of safeguarding continuity.
Commenting on the nomination, Biden said that Powell and Brainard had helped “steer us through the worst downturn in modern American history and put us on the path to recovery”.
Biden favors continuity with Powell nomination
The US economy is at a delicate point, with inflation threatening to run out of control despite all the warm words of the central bank, while the economic recovery continues to see relative weakness in the labour market compared to pre-pandemic conditions in areas such as labour market participation.
The president said: “I’m confident that Chair Powell and Dr Brainard’s focus on keeping inflation low, prices stable, and delivering full employment will make our economy stronger than ever before.
“Together, they also share my deep belief that urgent action is needed to address the economic risks posed by climate change, and stay ahead of emerging risks in our financial system.”
Biden leaves other Fed posts unfilled for now
A number of other vacancies are let unfilled by the president, including the vice chair for supervision
The press statement from the White House in part read: “The President intends to make those appointments beginning in early December, and is committed to improving the diversity in the board’s composition.”
The move comes against the background of inflation at a 30-year high of 6.2%.
With the left wing of the Democratic party critical of Powell who they see as being too concerned with helping to keep the stock market healthy at the expense of main street, Biden was thought to be susceptible to pressure to drop Powell. However ,such a move may have been interpreted negatively by the markets. It might have been seen as a move by the White House to make Powell the fall guy for rising inflation.
This month the Fed announced the start of asset purchase tapering to reduce to zero by June 2022 its current asset purchases of $120 billion a. month.
The Fed is under pressure to increase the rate of tapering and to move earlier on raising interest rates.
Some market commentators worry that the Fed is in danger of falling behind the curve on controlling inflation, which could force it to move more sharply at some point in the future. In this view the risks of a major policy error by the Fed are rising.
Jerome Powell was nominated as Fed chair by president Donald Trump in 2017. He was previously a governor at the Fed from 2012 and has previously served at the US Treasury.
