By Nathalie Voit
In a statement released by the White House Nov. 22, President Joe Biden announced his decision to renominate Jerome Powell for a second term as chair of the Federal Reserve. President Biden also elected Fed governor Lael Brainard to serve as vice chair of the central bank’s board of governors.
The much-anticipated decision followed weeks of speculation over who would be assigned the world’s top economic policy post, the Wall Street Journal reported. The reappointment signals policy continuity despite some pushback from progressive lawmakers who championed Brainard for the post of Fed chair.
“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 statement read. “During that time, Lael Brainard – one of our country’s leading macroeconomists – has played a key leadership role at the Federal Reserve, working with Powell to help power our country’s robust economic recovery.”
Powell, who secured bipartisan support soon after the nomination, was first appointed to the seven-member Federal Reserve Board in 2011 by then-President Barack Obama. In 2018, Powell was promoted to the post of chairman by then-President Donald Trump. The Republican and Wall Street veteran has amassed strong political support from both sides of the aisle, first when he was repeatedly attacked in 2018 and 2019 by Trump for raising interest rates, and later for his aggressive and rapid response to the COVID-19 pandemic in March 2020.
Powell’s nomination was widely revered by top administration insiders, including Treasury Secretary Janet Yellen, who served as chairwoman of the Fed from 2014 to 2018.
The central bank leader is recognized for his “decisive” action in the early days of the pandemic. Under Powell, the Fed acted speedily to curb interest rates to near zero and instituted a $120-billion-a-month bond-buying program that increased the Fed’s balance by more than $4 trillion. The all-hands-on-deck economic policy response was one of the largest since World War II.
The announcement soothed stock market concerns over switching central bank chiefs during a time of unprecedented inflation. On Monday morning, the Dow Jones Industrial Average rose 210 points. The S&P 500 also hit an intra-day record, rising 0.2%, according to CNBC.
“It appears markets are reacting positively to the continuity signal. Continuity will be key during this potentially tricky phase of the recovery where inflation is elevated and sticky, demand growth is strong but cooling and capital and labor supply is gradually rebounding,” chief U.S. economist at Oxford Economics Greg Daco said.
President Biden still has one vacant position to fill on the board of governors. Additionally, the top regulatory role of vice chair for supervision is set to open early next year.
“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,” President Biden said in his statement.