President Joe Biden on Monday nominated Jerome Powell to serve as chair of the Federal Reserve for a second term, expecting Powell would help contain inflation and bring the U.S. economy back to life “as we emerge from the pandemic”, the White House announced in a statement on Nov. 22.
Biden chose Powell over his main competitor for the position, Lael Brainard, who was appointed as vice chair of the Federal Reserve.
The decision ends speculation about who will lead the U.S. Central Bank as the economy faces high inflation.
Powell “has provided steady leadership during an unprecedently challenging period, including the biggest economic downturn in modern history,” while Brainard “has played a key leadership role at the Federal Reserve, working with Powell to help power our country’s robust economic recovery,” the White House said.
Since Biden took office inflation soared to 6.2% in October, the highest rate since 1990, as the Consumer Price Index from the Department of Labour reported.
Moreover, Biden said he expects Powell and Brainard would help stabilize high inflation and build the economy back better.
“We can’t just return to where we were before the pandemic, we need to build our economy back better, and 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.
Powell took office as Fed chairman in February 2018 for a four-year term. He served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush where he was responsible for policy on financial institutions and the Treasury debt market. In 2011, he was nominated to the Federal Reserve Board of Governors, where he served as a governor. In 2018, he succeeded Janet Yellen to become Fed chair during the Trump Administration.
Brainard took office as a member of the Board of Governors of the Federal Reserve System in June 2014. Prior to her appointment to the board, Brainard served as undersecretary of the Department of Treasury from 2010 to 2013 and counselor to the secretary of the Treasury in 2009.
According to Forbes, Powell was viewed as a safe pick by markets—not only is he favored by Republicans and moderate Democrats, but his accommodative monetary policy response to the pandemic has largely been credited for staving off economic depression.
The market viewed Brainard as a slightly more dovish pick, meaning that the Central Bank would likely have taken longer to raise interest rates than under Powell.