The chairman of the U.S. central bank is being nominated for a second term, and he was in charge of the Fed during the Covid-19 recession.
President Joe Biden made the announcement Monday morning, following weeks of speculation that Lael Brainard would get the spot.
Brainard will be the vice chair of the board of governors, which oversees the nation's banking system. Richard Clarida's term as vice chair ends in January of 2022.
Who is Lael Brainard?
We need to build our economy back better, and I am confident that Chair Powell and Dr. Brainard will do that.
The Senate will confirm the nominations.
The Powell Fed was praised by Biden for its decisive action in the early days of the Pandemic.
The central bank increased its holdings of Treasurys and mortgage-backed securities by more than $4 trillion as a result of the Fed's new lending programs.
The biggest economic downturn in modern history and attacks on the independence of the Federal Reserve were some of the things that Chair Powell has provided steady leadership during. Lael Brainard, one of our country's leading macroeconomists, has played a key leadership role at the Federal Reserve, working with Powell to help power our country's robust economic recovery.
Government bond yields were higher while stock market futures were little changed.
Markets are watching the pace of the Fed's withdrawal of policy support.
The program is likely to end in the summer of 2022, with reductions of some $15 billion per month.
Hikes in interest rate are a matter.
Most Fed officials have said that they won't consider raising rates until the bond buying ends. The initial hike is priced in for June 2022.
Powell carried the day, but it wasn't without controversy.
The Fed has been under fire recently for an ethics scandal in which multiple officials engaged in trading stocks at a time when the institution was implementing policies to boost markets. Powell said that he owned municipal bonds, which the Fed was buying, and he also bought and sold funds tied to the stock market.
The Fed has been hit with inflation running at the fastest pace in 30 years, and it's not the first time. Since September 2020 the official Fed policy has been to let inflation run hotter than the 2% target if it allows for full and inclusive employment, but prices have been rising well above that level.
Powell has held to the line that inflation will cool off once factors associated with the Pandemic return to normal. The recent readings have raised questions about the average inflation targeting that signaled a historic turn in central bank monetary policy.
The unemployment rate has fallen from a peak of 14.8% to 4.6% in the last year, as the inflation has come with a rapid economic recovery.
The recovery is a testament to the success of the President's economic agenda, and it is a testament to the Federal Reserve's actions to cushion the impact of the Pandemic and get America's economy back on track.
Brainard emerged as a key force in the race to carry the Fed through the next four years. She has pointed out several important issues to the Biden administration, including the need for the Fed to be prepared for climate change events.
A former undersecretary of the Treasury during the Obama administration, Brainard is a strong advocate of a digital dollar.
The importance of progressive for the Fed was emphasized by the White House.
Biden said that Powell and Brainard share his belief that urgent action is needed to address the economic risks posed by climate change and stay ahead of emerging risks in our financial system.
The Federal Reserve needs stability and independence if we want to continue to build on the economic success of this year, and I have full confidence in the leadership of Chair Powell and Dr. Brainard.
There is a vacant position on the board of governors and Biden needs to fill it. He will need to name a vice chair for supervision, a post that had been held until his term expired.
The initial congressional reaction was positive.
The Senate Banking Committee will hear the nominations first, and Sen. Brown said he would work with Powell to stand up to Wall Street and workers.
Powell was appointed to the position by President Donald Trump. Fed leaders are rarely removed after just one term, but Trump chose to pass over Janet Yellen. Powell was appointed to a 14-year term as governor by Barack Obama.
When the Fed raised interest rates seven times in two years, Trump criticized the central bank. The former president said that the Fed policymakers were boneheads for trying to change policy as the economy recovered.
Brainard is expected to be named vice chair of supervision, a key Fed post that oversees the nation's banking system.
Congress gives the Fed power to fulfill two mandates: maximize U.S. employment and keep inflation stable. The governors are nominated by the president and vote on how to adjust interest rates, regulate the nation's largest banks and monitor the health of the economy.
The central bank began buying Treasury bonds and mortgage-backed securities every month to combat the spike in unemployment and recession that began in the spring of 2020. It instituted a variety of lending programs in order to keep fixed income markets functioning after they were stressed out by the swine flu.
Economists credit a quick and large response for stabilizing financial markets. Corporations can take on loans to build factories or individuals can buy homes with lower interest rates.
Mike Feroli, chief U.S. economist at JP Morgan, said in an email that the Fed has placed more emphasis on having the economy operate at maximum employment.
This is a goal that progressive economists have advocated for a long time and which is consistent with Biden's agenda.
The Treasury Secretary told CNBC that she was happy with the work of the Fed chief. The first woman to serve as the Fed's chair and the country's first female Treasury secretary, was Janet Yellen.
He was advised to pick someone who was experienced and credible by me. I think that Chair Powell has done a good job.
Lawmakers on both sides of the aisle have praised Powell's leadership and amiability since he took over for Yellen.
The news is disappointing for progressives, including Sen. Elizabeth Warren, who said in September that the Fed's role in relaxing banking regulations makes Powell a "dangerous man" and that she would oppose his reelection.
This is breaking news. You can check back here for more updates.
