Joe Biden appoints Jay Powell as chairman of the Federal Reserve Board for the second term, a subtle moment as the US economy faces sustained high inflation and a volatile labor market recovery. I chose to continue with.
Lael BrainardIs considered a major competitor to Powell’s top work and has been elected to the role of Vice-Chair, currently served by Richard Clarida.
Biden praised Powell’s response to the coronavirus pandemic, his commitment to the federal government’s goals of full employment and stable prices, and his defense of the central bank’s “completeness and credibility” under the Donald Trump administration.
“We are in a position to attack inflation from the standpoint of strength, not weakness,” Biden said.
This decision ends months of speculation about the Biden administration’s willingness to restructure the Federal Reserve. It happens when central banks discuss how to fine-tune monetary policy in the face of supply-related turmoil and rising inflationary pressures.
Both Powell and Brainard have vowed to fight high prices. “We know that high inflation can hurt families … We have our tools to support the economy and strong labor markets and prevent higher inflation from taking hold. “I will use it,” Powell said.
Brainard added that he is working on “lowering inflation when people are focused on their work and how far paychecks go” and “supporting a growing economy that includes everyone.” ..
This month the Fed has begun Winding down A $ 120 billion monthly asset purchase program aimed at completely ending the stimulus next summer.
But lately inflation Data showing that the US consumer price index surged at the fastest pace in about 30 years last month raised the prospect that the Fed would have to abandon its patient approach to monetary policy. To accelerate The “taper” of the bond purchase program before raising interest rates rapidly over and over again next year.
Biden did not appoint a small number of vacant seats on the Fed’s board of directors, including the Vice-Chairman for Banking Regulation. The White House said their appointments would begin in early December.
Powell, 68, was promoted to Chairman of the Federal Reserve Board by Trump in 2017 after serving as governor from 2012, and once worked as the highest executive of the Treasury under George HW Bush. He was considered the most controversial choice for Biden, especially because Powell’s broad bipartisan support is likely to facilitate his confirmation process through the Senate.
Powell’s supporters also argued that changes in leadership could create unnecessary market volatility during such overt economic uncertainties.
Powell, who led the central bank’s response to the pandemic, won praise for preventing more extreme market panic and moving the US economy through one of the worst contractions.
Biden ignored while sticking to Republican Powell Progressivist criticism In their incumbent record of regulation, what they said was the dilutive rules of the largest financial institutions after the financial crisis.
Elizabeth Warren, a left-wing Democratic Senator in Massachusetts, said she opposed Powell’s nomination and voted against him. However, she said she supported Brenard’s nomination as Vice-Chairman of Biden. “Powell’s failure in regulation, climate and ethics makes the still-vacant position of the director’s vice-chair very important,” she said.
Brainard opposed easing the capital and liquidity requirements of US banks during Powell’s tenure and changing the Volcker Rule guidelines for proprietary trading.
After the announcement, the Eurodollar futures, a notable market indicator of interest rate forecasts, showed that by December 2022, interest rate hikes of at least three quarter points had been fully priced. , Raised to the highest level since March 2020.
Biden’s picks need to be confirmed by the Senate. Early comments from lawmakers suggested that the Republicans largely supported Powell’s honor.
Pat Toomey, a top Republican member of the Senate Banking Commission, said he supported Powell’s confirmation, but said he was “concerned about the regulatory policies supported by Governor Brainard.” Support was not so solid. His comments were repeated by another Republican member of the Banking Commission, Kevin Kramer.
Biden’s choice follows the rarely broken tradition of reappointing the chairman of the existing Federal Reserve Board during the president’s first term. This is in favor of policy-making continuity and central bank independence.
Barack Obama reappointed Ben Bernanke as chairman of the Federal Reserve Board in 2009, and Bill Clinton did the same in 1996 as Alan Greenspan.
Additional reports by Kate Duguid and Lauren Fedor
Joe Biden Nominates Jay Powell as Chairman of the Federal Reserve Board for Second Term
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