Jerome Powell is nominated for the US Reserve chair

Lucy Hooker
New York Business reporter

Published
Image source, Getty Images
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Jerome Powell has committed to remaining in this role for another 4 years

President Joe Biden nominated Jerome Powell for another term as the chair of US Federal Reserve.

Powell has been confirmed to continue his role which involves managing inflation, regulating the financial market, and will remain there for another four years.

Ex-President Donald Trump appointed him initially and began his term in 2018.

He was a 68 year-old Republican who has been highly praised because he managed the economy through the pandemic.

Lael Brainard was the other front-running candidate and was supported by progressives from President Biden’s Democratic Party.

They criticize Powell’s inaction on climate change and poverty, and claim he has weakened regulation of financial institutions.

Ms. Brainard has served on the Federal Reserve’s board of governors from 2014 to 2014. She has now been elected vice-chair.

Biden made the announcement of the nominees: “While we still have a lot to do, we’ve made incredible progress over the past 10 month in getting Americans back on the job and getting our economy going again.”

“That is testament to the economic strategy I pursued, to the decisive action taken by the Federal Reserve under Chair Powell and Dr Brainard in helping us navigate through the worst recession in American history and set us on the road to recovery.”

Nominations must be approved by the Senate before Ms Brainard and Mr Powell can assume their respective posts in February 2022.

Joe Biden, after months of speculation, and apparent hesitation for weeks, has decided to stay with Jerome Powell in what is probably the most important economic job on the planet.

He did this in spite of clear signs that it would anger his left-leaning party. As a result, some liberals from the divided Senate already pledged to vote against Powell’s nomination, which was initially selected by Donald Trump.

Biden might think that by choosing Lael Brainard, a more left-leaning vice-chair, he will help to ease some dissatisfaction. But that is unlikely for liberals who desire the Federal Reserve be more aggressive in dealing with income inequality and bank power.

Biden chose to maintain stability at the Federal Reserve, despite rising interest rates and ongoing Covid-related issues putting the US economy into a difficult position.

With some Republicans offering support, the president might consider Powell to be the best choice. If Senate Democrats break apart over the nomination, they may find it difficult to stay together and pass Biden’s Build back Better social spending legislation. This would have serious political consequences for their party.

Biden stated that he believed that Powell and Brainard would be focusing on fighting inflation. However, he also agreed with his conviction that it was urgent to address climate change and other threats to the financial sector.

The government of President Biden is under greater pressure because prices keep rising for all day goods. It’s reducing Americans’ spending power.

  • The fastest rise in US prices for the past three decades
  • The US Fed will reduce pandemic stimulation starting in this month
  • Left-wing Democrats Want Fed Chief Replaced

The consumer price inflation spiked 6.2% in the last month, defying all expectations, even those made by Powell.

According to CBS’s poll, the Federal Reserve is the primary responsible for controlling inflation. However, the poll also shows that the topic has an impact on the ratings of the president.

Janet Yellen, US Treasury Secretary, stated that having an experienced and independent Federal Reserve was crucial for navigating through this difficult time.

The news brought up US stocks, and they opened higher. This was in general agreement with investors’ expectations.

After President Trump’s more political approach, the appointment of Powell, an ex-private equity lawyer and Republican to be Fed Chair represents a return back to the nonpartisan, traditional approach.

In a moment of heated debate regarding interest rates strategy, it also provides continuity in policy.

Source: BBC.com

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