President Biden announced Monday that he is nominating Jerome Powell for a second four-year term as Federal Reserve chair, backing Powell’s leadership of the economy through a brutal pandemic recession in which the Fed The U.S.’s ultra-low rate policies helped boost confidence and revive the job market.
Biden also said he would nominate Lyle Brainard as vice president on the Fed’s board of governors, Powell’s preferred choice among Democrats and many progressives. The president said he would fill the remaining three slots on the board, including a vice president for supervision, a bank regulatory position, in early December.
Biden’s decision, after extensive deliberation, strikes a note of continuity and bipartisanship, at a time when rising inflation is burdening households and posing risks to the economy’s recovery. Backing Powell, a Republican who was first promoted to his position by President Trump, Biden dismissed complaints from progressives that the Fed had weakened bank regulation and that climate change was being overseen by banks. Considering has slowed down.
If confirmed by the Senate, Powell would remain one of the most powerful economic officials in the world. By either raising or lowering its benchmark interest rate, the Fed wants to either cool or encourage growth and hiring and keep prices stable. Its efforts to direct the largest US economy in the world usually have global consequences.
The Fed’s short-term rate, which has been pegged at near zero since hitting the economy in March 2020, impacts a wide range of consumer and business lending costs, including mortgages and credit cards. The Fed also oversees the largest banks in the country.
In a second term that begins in February, Powell will face a difficult and high-risk balancing act: rising inflation. causing difficulties for millions of families, economic reforms and easing the Fed’s mandate to keep prices stable. But with the economy still more than 4 million jobs shy of its pre-pandemic levels, the Fed has yet to fulfill its other mandate of maximizing employment.
If the Fed moves too slowly to raise rates, inflation could accelerate and force the Fed to take more drastic measures to rein in it later, potentially causing a recession. Can be made. Yet if the Fed raises rates too quickly, it could stifle recruitment and economic recovery.
Powell’s nomination must be approved by the Senate Banking Committee in a vote and then confirmed by the full Senate, which is considered probable.