Biden turns to Powell and Brainard to lead the Fed with ‘good judgment and proven courage’

President BidenJoe BidenBiden will speak on the economy on Tuesday, with the Fed election looming, the NAACP chair calling Rittenhouse’s verdict ‘a warning shot that vigilante justice is allowed’ Optimistic Democrats as the bill from social spending goes to the Senate MORE it said Monday that it has reappointed Federal Reserve Chairman Jerome Powell to preserve the central bank’s “stability and independence” as the United States faces challenges on the road to full economic recovery.

Biden announced Monday that he would nominate Powell, a Republican, to another four-year team at the helm of the Fed’s board of governors despite pressure from the left to replace him. The president also appointed Fed Governor Lael Brainard, the only Democrat on the Fed’s board and the favorite among Liberals to replace Powell, as vice president.

“I think it is important to have a Fed leadership with broad bipartisan support, especially now in such a politically divided nation,” Biden, flanked by Powell and Brainard, said in remarks Monday at the White House.

“In times like these, we need strong, proven, principled leadership at the Fed. We need people of good judgment and proven courage to preserve the Fed’s independence. And we need people of character and integrity who can be trusted to keep your focus on the right long-term goals for our country. I’m sure Jay and Lael are those people, ”Biden continued.

Previous President TrumpDonald Trump Two Fox News Contributors Resigned Over Tucker Carlson’s Jan. 6 Documentary Republican Senator: Decisions On Bills That Went Made Based On Whether They Hurt Or Help Trump Or Biden O’Rourke Will Not Say If He Wants Biden campaign for him in the Texas Senate race MORE chose Powell to chair the Fed in 2017, five years after he was appointed to the Fed’s board by the former President ObamaBarack Hussein Obama Voters need to feel the benefit, not just hear the message that Israel indicates confidence in its relationship with Biden Obama wishes Biden a happy birthday MORE. He previously served as Principal Investigator at the Bipartisan Policy Center, the Under Secretary of the Treasury for National Finance under George HW Bush, an investment banker, private equity partner, and attorney.

Brainard was also nominated to the Fed by Obama in 2014 after serving as undersecretary of the Treasury for international affairs. She was also one of former President Clinton’s top economic and business advisers.

Biden had spent weeks silently pondering whether to rename Powell or replace him with Brainard, shedding little information on the parameters of his choice. Until his announcement Monday, the president said little more than emphasizing the importance of the Fed’s independence, making a clear distinction between himself and his predecessor.

While Trump nominated Powell to lead the Fed in 2017, he spent most of his presidency berating him for refusing to manipulate the value of the dollar to fuel the White House’s trade battles with China and Europe. Trump once compared Powell unfavorably to Chinese President Xi Jinping and frequently threatened to fire him, but the Fed chairman largely ignored the president’s attacks.

Biden cited Powell’s refusal to give in to Trump’s will as proof of his independence as he faces another crucial test: continued rising inflation.

Consumer prices rose 6.2 percent in the year before October, the fastest annual rate in 30 years, due in large part to supply chain problems and other limitations related to the pandemic. While unemployment, economic growth, consumer spending and corporate profits have recovered substantially, higher consumer prices have put intense pressure on both the White House and the Fed.

Biden touted the broader strength of the US economy and praised both Powell and Brainard for quelling the initial blow of the pandemic and supporting a strong recovery. He noted that while most countries are struggling with higher inflation, none are struggling with a stronger economy than the US.

“Like all countries in the world, we have to deal with these rising cost problems. But let’s remember, we have the skill and the tools to get it under control. While other countries are stumbling out of this pandemic, we are moving forward, “said Biden, arguing that the United States can attack inflation” from a position of strength. “

While Biden emphasized the importance of independence by renaming Powell, his decision also solidifies a general alignment between the White House and the Fed on how to tackle inflation and foster a full recovery.

Powell, like Biden, expects inflation to decline as supply chain disruptions and workforce constraints related to the pandemic continue to decline. He also warned against withdrawing the stimulus too quickly and abruptly while millions of Americans have yet to return to the workforce.

Jay believes in the benefits of what economists call maximum employment. That’s an economy where companies have to compete to attract workers, rather than workers competing with each other for jobs, ”Biden said.

Under Powell, the Fed adopted a strategy that called for postponing interest rate hikes until inflation was on track to exceed its annual target of 2 percent. The new approach was intended to ensure that the labor market and wage growth were as strong as possible before the Fed intervened to slow the economy.

Jay conducted a landmark review to reinforce the Federal Reserve’s mission of achieving full employment. “We are making great progress toward that goal now and we believe Jay is the right person to help us finish that effort. while addressing the threat of inflation. “

While most economists expect the recent surge in inflation to fade, high price growth has tested the Fed’s commitment to its new approach and increased pressure on the bank to act.

While many Republican lawmakers and some moderate Democrats have questioned the Fed’s new approach to inflation, the majority is expected to back Powell. He was confirmed with 84 votes in 2018 and should have no trouble winning another term, even in a Senate evenly divided between Democrats and Republicans.

Biden’s decision to embrace continuity also gives him the opportunity to make more profound changes to the Fed board. With Brainard appointed to replace Fed Vice Chairman Richard Clarida, another Trump-appointed Republican, the president will have three seats. Vacancies on the Fed’s seven-person board to fill in January.

Along with Clarida’s position, Biden may appoint a new Fed board member to replace Fed Governor Randal Quarles, the former Fed vice president of supervision who is leaving the bank next month. There is also a vacant seat on the Fed board that Trump left unfilled.

While Jay and Lael provide continuing stability to the Fed, my additions will bring new perspectives and new voices. I also promise that my additions will bring new diversity to the Fed, which is much needed and long overdue in my opinion, ”said Biden.

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