Federal Reserve Chair Jerome Powell was nominated for a second four-year term by President Joe Biden on Monday, extending a tenure that began somewhat by chance, survived blistering criticism from former President Donald Trump, and now positions the ex-investment banker to finish the most consequential revamp of monetary policy since the 1970s.
Lael Brainard, the Federal Reserve board member who was the other top candidate for the job, will be vice chair, the White House said.
“While there’s still more to be done, we’ve made remarkable progress over the last 10 months in getting Americans back to work and getting our economy moving again,” Biden, a Democrat, said in comments emailed to reporters. “That success is a testament to the economic agenda I’ve pursued and to the decisive action that the Federal Reserve has taken,” he said.
Powell, 68, will need to be confirmed by the Senate, currently controlled by Biden’s Democratic party but closely divided. The decision to stick with Powell, a Republican and former private equity lawyer elevated to the Fed’s top job by Trump, rejuvenates what in recent decades had been a bipartisan approach to filling the position, and several Republican senators have already endorsed the reappointment despite Powell’s rocky relationship with Trump.
U.S. equity index futures edged higher in pre-market trading after the news. Treasury bond yields also rose and the dollar strengthened.
Powell’s reappointment had been encouraged by a cross-section of investors and economists with both conservative and liberal leanings.
But controversy over stock trading during the pandemic by two former regional Federal Reserve bank presidents roiled the renomination process with calls for broader reform. Powell pivoted fast, quickly rolling out new ethics rules for top Fed officials far stricter even than the ones his critics in Congress apply to themselves.
Ultimately, continuity and Powell’s command of monetary policy through the coronavirus crisis proved decisive.
His swift and aggressive actions at the start of the coronavirus pandemic in early 2020 were widely hailed as staving off a potential Depression. Later, some lauded his focus on jobs in the new policy framework he launched just over a year ago, and others argued it would be too risky to oust the Fed chair during a sensitive transition from the emergency measures taken during the health crisis.
“Fundamentally, if we want to continue to build on the economic success of this year we need stability and independence at the Federal Reserve – and I have full confidence after their trial by fire over the last 20 months that Chair Powell and Dr. Brainard will provide the strong leadership our country needs,” Biden said in a statement.
The current recovery, somewhat unexpectedly, has produced risks of persistent inflation even with 4.2 million jobs still missing because of the pandemic – a potential conflict between the Fed’s twin goals of maintaining maximum employment and stable prices.