NEW YORK, November 22 (the balance) - Powell is seen as a safe bet to keep monetary policy on track
Federal Reserve Chair Jerome Powell steered the economy with a steady hand through the rockiest times of the pandemic, President Joe Biden said Monday in announcing his nomination of Powell to lead the central bank again.
Biden nominated Powell on Monday to stay at the helm of the central bank for another four years and chose Fed Governor Lael Brainard to serve a four-year term as vice chair, replacing Richard Clarida, whose term expires Jan. 31. Powell’s current term expires in February. The Senate must approve both nominations.
Leading up to the announcement, most economists expected Powell to be renominated to the top job, but there was some speculation Brainard would get it. Of the two, Brainard was seen as more dovish, or patient with letting inflation run hot to let the economy reach maximum employment, one of the Fed’s main goals. That would mean allowing interest rates to stay low longer. Powell was seen as the safer bet, since he has affirmed his commitment to keeping inflation in check and has already indicated a timeline for interest rate increases.
In October, consumer prices rose at a 6.2% clip over the last 12 months, which was the fastest pace since November 1990.
“Biden had to thread this needle because he’s got, on the one hand, voters upset about inflation, and on the other hand, voters worried about their retirement savings,” said Michael D. Bailey, director of research at FBB Capital Partners. “He really has to please both of those camps, and probably the path of least resistance was continuity with Powell.”
Stocks closed mixed after the announcement. The S&P 500 fell 0.3% to 4,682.94, the Dow Jones Industrial Average rose 0.05% to 35,619.25, and the Nasdaq dropped 1.3% to 15,854.76.
