President Joe Biden announced this Monday that nominate Jerome Powell for a second four-year term as chairman of the Federal Reserve, supporting 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 that would name Lael Brainard, the only Democrat on the Federal Reserve Board of Governors and the preferred alternative to Powell among many progressives, as vice president. The president said he will fill the remaining three positions on the board, including a vice president of supervision, a banking regulator position, in early December.
Biden’s decision, arrived at after extensive consideration, marks a note of continuity and bipartisanship at a time when rising inflation is weighing on households and increasing risks to the economy’s recovery. By backing Powell, a Republican first elevated to office by President Donald Trump, Biden brushed aside complaints from progressives that the Fed has weakened banking regulation and has been slow to take change into account. climate in its supervision of banks.
If confirmed by the Senate, Powell would remain one of the most powerful economic officials in the world. By raising or lowering its benchmark interest rate, the Fed seeks to cool or stimulate growth and contracting, and keep prices stable. His efforts to run the US economy, the world’s largest, often have global consequences.
The Fed’s short-term rate, which has been set near zero since the pandemic hit the economy in March 2020, influences a wide range of consumer and business loan costs, including mortgages and credit cards. . The institution also oversees the largest banks in the country.
In a second term, starting in February, Powell would face a difficult, high-risk balancing act: Rising inflation is causing hardship for millions of families, tarnishing the economic recovery and undermining the Federal Reserve’s mandate to hold steady. prices. But with the economy still 4 million jobs below its pre-pandemic level, the institution has yet to fulfill its other mandate of maximizing employment.
If it moves too slowly to raise rates, inflation can accelerate further and force the institution to take more draconian steps later to control it, which could lead to a recession. However, if the Fed raises rates too quickly, it could stifle hiring and economic recovery.
Powell’s new nomination must be approved in a vote by the Senate Banking Committee and then confirmed by the full Senate, which is deemed likely.
(with AP information)