By backing the Republican official, the US president brushed aside complaints from progressives that the institution has weakened banking regulation and has been slow to take climate change into account in its supervision of banks.
President Joe Biden announced Monday that he would nominate Jerome Powell for a second four-year term as chairman of the Federal Reserve, backing Powell's economic management through a brutal pandemic recession. Rate policies ultra-lows from the Fed helped bolster confidence and revitalize the job market.
Biden also said he would appoint Lyle Bernard, the only Democrat on the Federal Reserve Board of Governors, and Powell's preferred replacement among many progressives as vice president. In early December, the president said he would fill the remaining three positions on the board, including a vice president of supervision, a banking regulator position.
Biden's decision arrived at after extensive consideration, marks a note of continuity and bipartisanship when rising inflation is weighing on households and increasing risks to the economy's recovery. By backing Powell, a Republican first elevated to office by President Donald Trump, Biden brushed aside complaints from progressives that the Fed has weakened banking regulation and has been slow to take change into account. The climate in its supervision of banks.
If confirmed by the Senate, Powell would remain one of the most potent economic officials in the world. By raising or lowering its benchmark interest rate, the Fed seeks to cool or stimulate growth and contract and keep prices stable. As a result, his efforts to run the US economy, the world's most significant, often have global consequences.
The Fed's short-term rate, which has been set near zero since the pandemic hit the economy in March 2020, influences a wide range of consumer and business loan costs, including mortgages and credit cards. . The institution also oversees the largest banks in the country.
In a second term, starting in February, Powell would face a complex, high-risk balancing act: Rising inflation is causing hardship for millions of families, tarnishing the economic recovery and undermining the Federal Reserve's mandate to hold steady. Prices. But with the economy still 4 million jobs below its pre-pandemic level, the institution has yet to fulfill its other mandate of maximizing employment.
Suppose it moves too slowly to raise rates. In that case, inflation can accelerate further and force the institution to take more draconian steps later to control it, leading to a recession. However, if the Fed raises rates too quickly, it could stifle hiring and economic recovery.
Powell's new nomination must be approved in a vote by the Senate Banking Committee and then confirmed by the full Senate, which is deemed likely.