President Joe Biden said Monday he will re-nominate Fed Chairman Jerome Powell for a second term as the US grapples with scorching inflation, persistent supply-chain snags and COVID-19 cases that are once again on the rise.
Biden appeared sure to re-nominate Powell until a few weeks ago, when lefty politicians like Sen. Elizabeth Warren voiced their opposition. Progressives, who lobbied for somebody who would be tougher on Wall Street and climate change, had pushed Fed Governor Lael Brainard to get the spot.
Brainard instead will become vice chair of the board of governors, succeeding Richard Clarida, Biden also announced Monday. The nominations must be confirmed by the Senate.
“Chair Powell has provided steady leadership during an unprecedently challenging period, including the biggest economic downturn in modern history and attacks on the independence of the Federal Reserve,” the White House said Monday in a statement.
The renomination of Powell, who was picked by former President Donald Trump to lead the Federal Reserve after being appointed as Fed governor under Obama, comes as white-hot inflation readouts — their highest in more than a decade have slammed the White House in the polls as prices for everything from gas to food have soared.
Powell and the administration have largely written soaring prices off as a factor of supply-chain issues related to the pandemic, insisting that spiking prices will subside. And Powell has been reluctant to hasten the tapering of the Fed’s massive bond-buying program or to raise interest rates until the country sees more progress in the recovery of the labor market.
Sen. Pat Toomey, a Republican from Pennsylvania, said Monday he supported the re-nomination despite the fact he has “strongly disagreed with Chairman Powell’s decision to continue the Fed’s emergency accommodative monetary policy—long after the economic emergency had passed.”
Toomey added that “Chairman Powell’s recent comments give me confidence that he recognizes the risks of higher and more persistent inflation and is willing to act accordingly to control it. I look forward to supporting his confirmation.”
But other Republicans have repeatedly slammed Biden for not doing enough to provide relief to families struggling to keep up with rising expenses. Compared with before the pandemic, the country is still missing millions of workers who lost their jobs during the crisis, sparking a nationwide labor shortage that companies say is squeezing profits and holding back business.
Greg McBride, chief financial analyst for Bankrate, said continuity at the Fed will likely help with the ongoing response.
“With the Federal Reserve at an inflection point of starting to dial back stimulus, continuity at Fed Chair is key. It’s tough to change jockeys in the middle of the race,” he said.
“Reappointing Jerome Powell helps alleviate some concerns about politics compromising the independence of the Federal Reserve. By January, the president will still be able to name replacements for three open seats on the Fed Board of Governors, including the influential Vice Chair of Supervision.
“Making this announcement on Monday morning before U.S. markets open is no coincidence and should alleviate any jitters from uncertainty about the Fed creeping in as we head into the Thanksgiving holiday.”
Stocks rose on news of the announcement. The Dow Jones Industrial Average was recently up more than 280 points in mid-morning trades and the S&P 500 rose 0.9 percent.