President Joe Biden nominated Federal Reserve Chair Jerome Powell for a second four-year term on Monday, putting the former investment banker in a solid position to complete the most significant monetary policy overhaul since the 1970s and lead the economy out of the economic crisis. In addition, the White House said that Lael Brainard, a member of the Federal Reserve Board who was the other top candidate for the role, will serve as vice-chair. The nominees bring together two monetary policy veterans and partners on the recent revamp of Fed policy, which changed the focus from the preeminent concentration on inflation established four decades ago to jobs.
Their task will be to maintain job growth in the United States while ensuring that current high inflation does not become entrenched. “I believe Jay is the best guy to take us through,” Biden added, citing Powell’s “steady leadership” in calming anxious markets and his confidence in monetary policies that foster maximum employment. The United States is still suffering from the effects of the pandemic, including inflation, he said. Still, the country has made “enormous progress,” including adding nearly 6 million jobs and boosting wages since he was sworn in – encouraging indicators for which the Federal Reserve deserves credit.
Powell, a moderate Republican, appointed by former President Donald Trump, and Brainard, a former Democratic cabinet member, “gives potentially non-partisan credibility to a more realistic assessment of inflation threats” that the US faces. If inflation, both committed to combat, proves to be more persistent than predicted, reappraisal might entail interest rate hikes sooner rather than later. Brainard also promised to support a thriving economy that benefits everyone and a Federal Reserve that serves all Americans in all communities. Following the announcement, US equities soared to new highs. Bond yields increased while the dollar strengthened. Powell’s reappointment had been hailed by a cross-section of conservative and liberal investors and economists, as well as members of Congress from both parties.