Biden to keep Jerome Powell as Fed chief for 2nd term

Washington: President Joe Biden selected Jerome Powell for a second four-year term as US Federal Reserve chair and elevated Governor Lael Brainard to vice chair, maintaining consistency at the central bank as it grapples with the fastest inflation in three decades along with the lingering effects of the coronavirus pandemic.

The move, announced by the White House on Monday, rewards Powell for helping rescue the US economy from the pandemic and tasks him with protecting that recovery from a surge in consumer prices. A Republican, Powell faces what will likely be a smooth confirmation in the Senate, where he was backed for his first term as chair in an 84-13 vote.

Brainard would replace Richard Clarida in the vice chair slot and may face opposition from Senate Republicans for her confirmation.

 “Clearly the market is looking at the likelihood that the Fed will increase the rate of tapering and move up the timing of the first rate hike now that Powell” is re-nominated, Kathy Jones, chief fixed-income strategist at Charles Schwab & Co said on Bloomberg Television after the news was released. Investors expect the Fed to raise rates from near zero in June, according to pricing in interest-rate futures markets. US equities opened higher and Treasuries extended losses after the Fed news. Biden plans to announce that nomination along with additional picks for open seats on the Board of Governors beginning in early December, the White House said.

The choice of Powell will also likely win appro­val from investors by ensuring continuity at the central bank as it begins withdrawing ultra-easy monetary policy amid the challenges of persistent inflation. Biden, in a writ­te­n statement, called the economic recovery so far a “testament to the economic agenda I’ve pursued and to the decisive action that the Federal Reserve has taken under Chair Powell and Dr. Brainard to help steer us through the worst downturn in modern American history and put us on the path to recovery.”

Image courtesy of (Photo courtesy PTI)

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