Biden Renominates Jerome Powell to Another Term as Federal Reserve Chairman
President Joe Biden on Monday renominated Federal Reserve Chairman Jerome Powell to another term as chairman of the nation’s central bank.
The president also named Fed board member Lael Brainard as vice chair. Brainard had been considered as a possible replacement for Powell.
“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,” Biden said in a statement. “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.”
The central bank began buying $120 billion per month of Treasuries and mortgage-backed securities as a way to buoy markets and keep interest rates near record lows. Powell led a revision of the Fed’s approach to monetary policy, emphasizing the health of the labor market as much as inflation and price stability.
Powell steadfastly refused entreaties to cut back on the Fed’s accommodative policy while also resisting calls to raise interest rates, saying the labor market still showed signs it had not recovered enough to get lower-income and other workers back into the economy.
Powell recently announced the central bank would begin reducing its asset purchases by at least $15 billion a month but added the move should not be interpreted as a step toward increasing rates.
“The steady leadership of Chair Powell and the Federal Reserve helped ensure that America’s economy was able to recover from a once-in-a-generation health and economic crisis,” Treasury Secretary Janet Yellen, a former Fed chair, said in a statement.
Greg McBride, chief financial analyst at Bankrate, said in a statement: “With the Federal Reserve at an inflection point of starting to dial back stimulus, continuity at Fed Chair is key. It’s tough to change jockeys in the middle of the race.”
Nominated to the Fed by former President Barack Obama in 2014, Powell was chosen as chairman by former President Donald Trump. He has enjoyed bipartisan support, while receiving criticism from the liberal wing of the Democratic Party, notably Sens. Elizabeth Warren, Sheldon Whitehouse and Jeff Merkley. In contrast, centrist Democrats like Montana Sen. Jon Tester called for his renomination.
Criticism of Powell mainly centers on perceived lack of support from the Fed for more action on how financial firms approach climate change and a belief he has been more sympathetic to Wall Street rather than Main Street.
Lisa Mensah, president and CEO of the Opportunity Finance Network, says Powell has shown a willingness to engage with groups representing what she calls “the bottom of the economic pyramid.”
“I think in Powell we have someone who has acknowledged a rising tide does not lift all boats,” adds Mensah, who also views Brainard favorably.
While Brainard has parted with Powell over issues related to bank supervision, the pair has actually moved largely in lockstep on monetary policy and the current stance on inflation and interest rates. However, some observers believe Brainard has actually signaled a likelihood to keep interest rates lower for longer than Powell might.
The Fed has been placed squarely in the middle of the political debate over inflation, which has been rising at a more than 6% annual rate in recent months. Earlier this year, Powell and other Fed officials branded the sharp rise in prices “transitory” and a by-product of the coronavirus. Officials have pointed to ongoing disruptions in the global supply chain for much of the increase, which has been concentrated in areas like energy and materials.
More recently, the inflation has broadened and now affects food, shelter and even the price of some services. But, there have been some signs, albeit small ones, that the price hikes may be slowing and that the supply chain bottlenecks are easing somewhat. Major retailers such as Walmart and Target said in their recent third-quarter earnings announcements that they expected to have plenty of supplies on shelves for Christmas.