Biden to keep Powell as Fed chair, Brainard gets vice chair

Monday, November 22, 2021
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Federal Reserve Chairman Jerome Powell speaks after President Joe Biden announced Powell's nomination for a second four-year term as Federal Reserve chair, during an event in the South Court Auditorium on the White House complex in Washington, Monday, Nov. 22, 2021. Biden also nominated Lael Brainard as vice chair, the No. 2 slot at the Federal Reserve. AP PHOTO

WASHINGTON (AP) — President Joe Biden announced Monday he’s nominating Jerome Powell for a second four-year term as Federal Reserve chair, endorsing Powell’s stewardship of the economy through a brutal pandemic recession in which the Fed’s ultra-low rate policies helped bolster confidence and revitalize the job market.

Biden also said he would nominate Lael Brainard, the lone Democrat on the Fed’s Board of Governors and the preferred alternative to Powell among many progressives, as vice chair.

A separate position of vice chair for supervision, a bank regulatory post, remains vacant, along with two other slots on the Fed’s board. Those positions will be filled in early December, Biden said.

His decision strikes a note of continuity and bipartisanship at a time when surging inflation is burdening households and raising risks to the economy’s recovery. In backing Powell, a Republican who was first elevated to his post by President Donald Trump, Biden brushed aside complaints from progressives that the Fed has weakened bank regulation and has been slow to take account of climate change in its supervision of banks.

“If we want to continue to build on the economic success of this year, we need stability and independence at the Federal Reserve — and I have full confidence after their trial by fire over the last 20 months that Chair Powell and Dr. Brainard will provide the strong leadership our country needs,” Biden said in a statement.

In a second term, to begin in February, Powell would face a difficult and high-risk balancing act: Inflation has reached a three-decade high, causing hardships for millions of families, clouding the recovery and undercutting the Fed’s mandate to keep prices stable. But with the economy still 4 million-plus jobs shy of its pre-pandemic level, the Fed has yet to meet its other mandate of maximizing employment.

Next year, the Fed is widely expected to begin raising its benchmark interest rate, with financial markets pricing in two increases. If the Fed moves too slowly to raise rates, inflation may accelerate further and force the central bank to take more draconian steps later to rein it in, potentially causing a recession. Yet if the Fed hikes rates too quickly, it could choke off hiring and the recovery.

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