Monday 22 November 2021
Continuity at the top
Biden nominates Fed Chairman Powell for a second term
There is no surprise. US President Biden wants to keep the head of the world’s most influential central bank in office. Fed Chairman Powell can thus continue the exit from the crisis policy that has just begun.
Fed chairman Jerome Powell is expected to remain at the helm of the US Federal Reserve for another four years. US President Joe Biden nominated him for a second term. Powell’s mandate expires in February. Fed board member Lael Brainard is to become vice president of the central bank, as the White House announced.
Many economists had expected Biden to opt for continuity and leave the Fed chief in office. The most influential central bank in the world has only just initiated the gradual exit from the very loose monetary policy that was initiated at the height of the Corona crisis in 2020.
The Republican became head of the central bank in 2018 under then-President Donald Trump. The advocate of a loose monetary policy is also highly regarded by Biden’s democrats. A second term for Powell has yet to be confirmed by the US Senate.
The left wing of the Democrats had pushed for a change at the top of the Fed. The favorite was the 59-year-old financial expert Brainard. The Hamburg-born US Democrat and former Treasury Secretary has been on the Fed’s Executive Board, known as the Board of Governors, since 2014.
Interest rate turnaround will probably not be before the end of 2022 at the earliest
The decision to head the Fed comes at a critical time for the US economy and financial markets. The central bank plays a central role in the fight against the economic consequences of the corona pandemic. In March 2020, it lowered the key interest rate to between zero and 0.25 percent and is pumping 120 billion dollars (around 104 billion euros) into the markets every month to support the economy.
At the beginning of the month, the central bank announced that it would cut back bond purchases in November. However, the Fed intends to wait until the end of 2022 to raise key interest rates. In the past few months, however, rapidly rising consumer prices have caused great unrest.
Fed Chairman Powell has repeatedly asserted that the rise in inflation is a temporary phenomenon. It is due, among other things, to the international supply chain problems.