Biden will keep Powell as Fed chair, resisting pressure for a shake-up

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President Joe Biden will renominate Jerome Powell, the Federal Reserve chair, to another four-year term — ensuring policy continuity at a moment of rapid inflation and vast economic uncertainty but potentially angering progressive Democrats who had been agitating for a change in leadership
The much-awaited decision was a return to tradition in which the central bank’s top official is reappointed regardless of partisan identity — a norm bucked by former President Donald Trump, who appointed Powell instead of renominating Janet Yellen. The stakes in the choice are unusually high.

It reflected a general view by Biden and his top aides that Powell has done well in supporting the economy through the pandemic recession and its halting recovery. It is also a bet that Powell is the right leader to steer the Fed through an economically and political treacherous storm of price increases, which administration officials are convinced will dissipate next year.

Biden will also nominate Lael Brainard, a Fed governor whom many progressive groups had championed to replace Powell, to serve as the Fed’s vice chair. Renominating Powell — who won bipartisan support moments after the announcement — also spares the White House what might have been a bruising confirmation battle if the president had instead chosen Brainard, who has fewer Republican supporters in the Senate than Powell.

Inflation has picked up sharply this year, with consumer prices increasing at the fastest pace in more than three decades in the year through October. The central bank is charged with keeping consumer prices stable while striving for maximum employment, and striking that balance could require difficult policy choices in the months ahead.

While taming inflation falls to the Fed, Biden has been suffering politically as prices rise for food, gas and airplane tickets. The president has repeatedly tried to reassure Americans that his economic policies will ultimately calm inflation, a message he is expected to repeat during remarks Tuesday.

His Fed decisions in recent weeks have become tangled in the politics of price increases, particularly as the president pushes Senate Democrats to coalesce around a $2.2 trillion climate change and social policy bill that Biden says will ease inflationary pressures in years to come but that Republicans warn will stoke higher prices immediately.
Biden said he was certain that both Powell and Brainard would work to stabilize inflation and keep the economic recovery on track.

“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 in a statement Monday.

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