Biden bets Fed's Powell can usher in full U.S. economic recovery
U.S. President Joe Biden on Monday nominated Federal Reserve Chair Jerome Powell for a second four-year term, positioning the former investment banker to continue the most consequential revamp of monetary policy since the 1970s and finish guiding the economy out of the pandemic crisis.
Lael Brainard, the Federal Reserve board member who was the other top candidate for the job, will be vice chair, the White House said.
Brainard was designated as vice chair of the board of governors; she had been widely expected to get a separate vice chair for supervision post, which oversees the nation’s banking system. As vice chair for monetary policy, she would succeed Richard Clarida, whose term expires Jan. 31, 2022, and will oversee a wider swath of policy decisions.
The announcement coincided with a boost to the stock market while government bond yields were higher across the board.
Markets are watching closely the pace the Fed will follow as it unwinds its massive policy support.
Officials already have indicated they will start paring back the bond purchases, with reductions of some $15 billion per month that would see the program likely conclude in late spring or early summer 2022.
Interest rate hikes are another matter.
Most Fed officials thus far have said they won’t consider raising rates at least until the bond buying taper winds down. However, markets have been looking for a faster timeline for rates, with the initial hike now priced in for June 2022.
Treasury Secretary Janet Yellen, who also was Powell’s immediate predecessor at the Fed’s helm, lauded Powell for the way he handled the job in the face of the pandemic crisis, which brought the U.S. not only its steepest but also its shortest recession.
Reference: CNBC, Reuters
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