President Joe Biden nominated Jerome Powell to head the Federal Reserve for a second term. His first term, which began in 2018, has been highlighted by the Fed’s response to the COVID-19 pandemic.
“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 in a Monday morning announcement. Powell’s re-nomination must be approved in a vote by the Senate Banking Committee and then confirmed by the full Senate. Both of those things are considered likely to happen.
In addition to announcing his decision to nominate Powell for a second term Monday, President Biden also nominated Dr. Lael Brainard serve as the Fed’s vice chair. Brainard is the lone Democrat on the Fed’s Board of Governors. She’s also the preferred alternative to Powell, a Republican, among many progressives.
“Powell and Brainard share the administration’s focus on ensuring that economic growth broadly benefits all workers. That’s why they oversaw a landmark re-evaluation of the Federal Reserve’s objectives to refocus its mission on the needs of workers of all backgrounds,” the White House said. “They’ve advanced key priorities that the president shares, like addressing the financial risks posed by climate change, and staying ahead of emerging risks to our financial system.”
Powell would face a difficult and high-risk balancing act in his second term. The country has been seeing record inflation for months, while the Fed has yet to meet its other mandate of maximizing employment. Earlier this month, the Fed announced it will begin tapering down its $120 billion in monthly bond purchases. Now the decision that needs to be made is what to do with the Fed’s benchmark rate.
By either raising or lowering the rate, the Fed could either cool or stimulate growth and hiring, with the goal of keeping prices stable. However, if the Fed moves too slowly to raise rates, inflation may accelerate further, and if the Fed hikes rates too quickly, it could choke off hiring and the economic recovery.
“I’m confident that Chair Powell and Dr. Brainard’s focus on keeping inflation low, prices stable, and delivering full employment will make our economy stronger than ever before,” Biden said in the statement.
A separate position of vice chair for supervision, a bank regulatory post, remains vacant, along with two other slots on the Fed’s board. According to the White House, those positions will be filled in early December.
