President Joe biden announced this Monday the Jerome Powell’s nomination for a second term at the helm of the United States Federal Reserve (Fed), a sign of continuity at the central bank amid growing concern about high inflation in the country. “Powell has provided strong leadership during a period of unprecedented challenges, including the largest economic downturn in modern history,” the White House said in a statement.
The appointment, which is expected to be confirmed by the Senate, ends weeks of speculation about whether Biden, a Democrat, would reappoint the Republican to the presidency, or if he would listen to the left wing of his party to replace him with the governor of the Fed, Lael Brainard. Finally Brainard will be vice president of the most influential central bank in the world, while Powell will remain at the forefront of the process of reducing stimuli decreed by the pandemic.
“We can’t just go back to where we were before the pandemic, we need to better rebuild our economy.”Biden said in the official statement. “I am confident that President Powell and Brainard’s approach to keeping inflation low, prices stable and achieving full employment will make our economy stronger than ever,” the president added.
Powell led central bank response to pandemic recession, which involved reducing the loan rate to zero and injecting trillions of dollars of liquidity. The bank has been withdrawing these supports as the economy recovers, but inflation has also skyrocketed, causing a drop in Biden’s popularity ratings according the surveys.
Inflation closed October with a 6.2 percent rate, the highest in three decades for the United States. The Fed insists that it is a “transitory” phenomenon, although it acknowledges that it will last longer than anticipated. “We will use all of our tools to support the economy and the strong labor market, and prevent further inflation from taking hold.”, Powell assured in a ceremony at the White House with Biden and Brainard, in his first public statements after the nomination.
Powell also led a change in Fed policy to keep interest rates lower for longer than normal to stimulate full employment, particularly for minorities who are often disadvantaged. Unemployment among black Americans is still more than double that among whites, a disparity that Powell always mentions in his public appearances.
Powell, 68, was appointed by Donald Trump in 2018, when the then president decided not to give Democrat Janet Yellen a second term. However, Trump came to publicly regret putting him at the head of the Fed. Powell refrains from comment on the matter in his very rare media appearances and in the press conferences that he customarily follows after each monetary committee meeting.
Now Powell must be confirmed by the Senate, which Biden’s Democrats control closely, though analysts predict it will receive a string of votes from opposition Republicans, such as Mitt Romney’s.
Biden has focused on getting congressional approval for a gigantic welfare bill that would spend $ 1.8 trillion in ten years.. To do this he needs the votes of nearly every Democrat, and appointing a Fed chairman capable of taking a tougher line on banks and climate change could be seen as a way to build support among progressives. In that sense, the president highlighted on Monday that the Federal Reserve must “be a leader among central banks globally in addressing climate-related financial risks”.
A native of Washington, Powell is an attorney graduated from Georgetown University. A former partner from 1997 to 2005 of the gigantic US investment fund Carlyle, he is one of the richest people to have run the central bank. At his confirmation hearings in 2018, he declared a fortune of $ 18 million to $ 55 million..
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