Jerome Powell: Biden faces key decision to reappoint Federal Reserve chairman

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He has not revealed his thinking, and his aides say he has not started the formal process of determining whether to run for a second term for Jerome Powell in the government’s most important economic policy post. But there is reason to believe that he could follow the model established by Presidents Bill Clinton and Barack Obama when they renamed Alan Greenspan and Ben Bernanke respectively.

The case begins with Powell’s pledge to use expansionary monetary policies to support economic activity since the coronavirus pandemic struck in early 2020. He has maintained this vision in the name of restoring lost jobs as the economy has regained robust growth.

Of particular significance for now, Powell’s view that the current explosion in inflation will only be temporary follows the view of Biden’s economics team – even though that team includes many economists. more liberal than the former head of private equity. Asked about growing inflation concerns last week, an economist at Biden told CNN: “I am where Powell is.”

Biden signaled his comfort with their shared perspective in remarks to the White House on inflation earlier this week.

“As I made clear to President Powell at our recent meeting, the Fed is independent,” the President said. “It should take whatever steps it deems necessary to support a strong and sustainable economic recovery.”

Powell was first appointed to a seat on the Fed’s board of governors by Obama when Biden was his vice president. In November 2017, President Donald Trump appointed him to succeed Janet Yellen, now Biden’s Treasury Secretary, as president. Powell won Senate confirmation by an overwhelming majority, with imbalanced support from Democrats and Republicans.

Powell’s work history and selection by Trump will present an inviting target for some progressives such as Senator Elizabeth Warren of Massachusetts – who voted against his confirmation as Fed chairman and criticized him for being too out of date. comfortable with the big banks at a hearing last week. But current Senate Banking Chairman Sherrod Brown, an Ohio Democrat, voted to confirm it, and some key Democratic ridings, such as unions, have signaled their acceptance.

Further, Biden’s emphasis on bringing the country closer together to the extent possible suggests a potential benefit from extending the term of a Republican-appointed president whose views largely align with those of a Republicans. democratic administration. Democratic presidents, as witnessed by the early Fed chairman picks of Clinton and Obama, have felt a particular need over the past decades to exercise restraint in economic management.

Biden’s fiscal policy ambition – currently pending before Congress in $ 4 trillion in physical and human infrastructure proposals – may serve to heighten that imperative. And the fact that Biden can make additional Fed appointments at the same time means he could balance Powell’s re-appointment with those of more progressive picks.

“I expect a reappointment,” an outside source close to Biden’s team told CNN. The same goes for 36 of 40 economists polled by Reuters last week.

Still, anyone interested in choosing Biden will have to wait a bit. Powell’s current term as president ends in early 2022 and the decision-making process has not reached the Oval Office.

“I don’t know what the president will decide when the choice is presented to him,” a senior administration official told CNN. “I know it was not submitted to him.

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