President Joe Biden on Monday announced he will re-nominate Jerome Powell for a second term as Fed chair as the nation contends with scorching inflation, persistent supply-chain issues and COVID-19 cases that are once again on the rise.
Powell, who was picked by former President Donald Trump to lead the Federal Reserve after being appointed as Fed governor under Obama, has been central to the country’s economic response to the pandemic.
Biden seemed sure to re-nominate Powell until a few weeks ago, when lefty politicians like Sen. Elizabeth Warren voiced their opposition. Progressives instead pushed Fed Governor Lael Brainard to get the spot.
Brainard will become vice chair of the board of governors, succeeding Richard Clarida, Biden also announced Monday.
The nominations need to be confirmed by the Senate.
“Chair Powell has provided steady leadership during an unprecedently challenging period, including the biggest economic downturn in modern history and attacks on the independence of the Federal Reserve,” the White House said Monday in a statement.
“During that time, Lael Brainard – one of our country’s leading macroeconomists – has played a key leadership role at the Federal Reserve, working with Powell to help power our country’s robust economic recovery.
“America needs steady, independent, and effective leadership at the Federal Reserve so it can advance its dual goals of keeping inflation low and prices stable, as well as creating a strong labor market that broadly benefits workers with better jobs and higher wages.”
Sen. Pat Toomey, a Republican from Pennsylvania, hailed Powell’s re-nomination shortly after it was announced, saying he acted swiftly and took extraordinary and necessary steps when the pandemic hit last year. He “also worked constructively with those of us developing the CARES Act,” Toomey said in a statement.
“While I have strongly disagreed with Chairman Powell’s decision to continue the Fed’s emergency accommodative monetary policy—long after the economic emergency had passed—Chairman Powell’s recent comments give me confidence that he recognizes the risks of higher and more persistent inflation and is willing to act accordingly to control it. I look forward to supporting his confirmation.”
Powell’s renomination could be seen as a landmark decision by Biden, who has struggled in his first year to guide the country through its economic emergence from the pandemic. White-hot inflation readouts through the summer and fall have hit the White House in polls as everything from gas to food has soared in prices.
Powell and the administration have largely written soaring prices off as a factor of supply-chain issues related to the pandemic, insisting that spiking prices will subside.
But Republican politicians have repeatedly slammed Biden for not doing enough to provide relief to families struggling to keep up with rising expenses.
And Powell has been reluctant to hasten the tapering of the Fed’s massive bond-buying program or to raise interest rates until the country sees more progress in the recovery of the labor market.
Compared with before the pandemic, the country is still missing millions of workers who lost their jobs during the crisis, sparking a nationwide labor shortage that companies say is squeezing profits and holding back business.
“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 said in a statement.
“That success is 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.”
Greg McBride, chief financial analyst for Bankrate, said continuity at the Fed will likely help with the ongoing response.
“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,” he said.
“Reappointing Jerome Powell helps alleviate some concerns about politics compromising the independence of the Federal Reserve. By January, the president will still be able to name replacements for three open seats on the Fed Board of Governors, including the influential Vice Chair of Supervision.
“Making this announcement on Monday morning before U.S. markets open is no coincidence and should alleviate any jitters from uncertainty about the Fed creeping in as we head into the Thanksgiving holiday.”
Stocks rose on news of the announcement. The Dow Jones Industrial Average was up almost 150 points in premarket trading and the S&P 500 rose 0.4 percent.