Following the passing of the Biden administration’s
infrastructure bill, the U.S. president appears to be nearing his
decision on whether or not he will reappoint Jerome Powell, the current
Federal Reserve Board chairperson. According to a few reports Powell may
be chosen, but other reports say the Fed’s Board of Governors member,
Lael Brainard, could also be a frontrunner for the position.
President Biden to Choose Fed Chair ‘Fairly Quickly’
Amid the rising inflation and supply chain woes, U.S. president Joe
Biden is thinking about who will run the Federal Reserve when Jerome
Powell’s term ends next February. Media pundits say the timing “is crucial,” as the U.S. central bank has been discussing tapering back quantitative easing (QE) and adjusting rates upwards. Of course, these have all been just conversations so far and the members of the Fed have yet to decide on tapering back large asset purchases and hiking the benchmark rate.
Meanwhile, rising inflation has reared its ugly head in the lives of Americans, and purchasing power has been eroding over the last 12 months. This week’s data
from the consumer price index (CPI) jumped 6.2% from a year ago and
stock markets shuddered after the news broke. The latest CPI data even
pushed Biden to make a statement about the rising inflation as the U.S.
president said the White House would be focused on getting people back
to work, “getting prices down,” and “making sure our stores are fully
stocked.”
Now various reports say that Biden is in the midst of choosing a new
Federal Reserve Board chairperson or planning to let Jerome Powell keep
his post. CNN contributors John Harwood and Phil Mattingly explain
that “[Jerome] Powell [is] seen as the frontrunner to be Biden’s pick
for Federal Reserve chair as he nears a decision.” The CNN report notes
that Biden’s decision could happen as early as next week. It is also
assumed that Biden will sign the new infrastructure bill on Monday.
Brainard ‘More Aligned With Left-Leaning’ Politicians, Financial
Services Committee Members Urge Biden to Choose New Lead, Powell Still
‘Favored’ by ‘Both Sides’
11 days ago, Biden spoke about his decision about the Fed chair
position at a news conference and hinted at choosing “fairly quickly.”
“I’ve given a lot of thought to it, and I’ve been meeting with my
economic advisors on what the best choices are, and we’ve got a lot of
good choices,” Biden told reporters. “But I’m not going to speculate
now,” the president added. Despite CNN’s report, other editorials claim
that Biden may choose the Fed’s Board of Governors member Lael Brainard.
Rob Garver, a contributor to voanews.com, says the recent inflation spike may sway Biden’s Fed chair decision.
Garver highlights that Powell is a Republican and was chosen by
former U.S. president Donald Trump. As far as Brainard is concerned, she
is a Democrat and is “more aligned with left-leaning members of her
party, such as U.S. senator Elizabeth Warren of Massachusetts,” Garver
details. However, Garver further explains that the current Fed chair is
“favored” at the moment. Christopher Russo, a research fellow at George
Mason University’s Mercatus Center, told VOA’s Garver: “Powell has built
up a great amount of credibility with both sides, both Republicans and
Democrats.” Russo further added:
In the pandemic, the Fed adopted a flexible average
inflation target, meaning that they are going to run inflation above
target after periods where it ran below target, and Powell has done a
lot of work to explain the importance of that policy to skeptics in
Congress.
The reports concerning Biden choosing a new Fed chairperson soon follow the mid-September “sources with ties to Washington,”
saying that Biden will renominate Jerome Powell. However, three
politicians from the House Financial Services Committee have been urging Biden
to choose a new Fed chair who will address social justice and climate
change. U.S. Democratic representatives Alexandria Ocasio-Cortez (AOC),
Rashida Tlaib, and Ayanna Pressley stressed on August 30:
Under his leadership, the Federal Reserve has taken very
little action to mitigate the risk climate change poses to our financial
system.
The recently passed 1,600-page ‘Build Back Better’ infrastructure bill allocates around $550 billion toward fighting the alleged climate crisis in the United States. Despite the massive amounts of quantitative easing (QE)
tactics and a benchmark rate suppressed at zero, Jerome Powell’s
efforts since being appointed by former president Trump may not be good
enough for members of the Democratic party.
