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President Joe Biden elevated Governor Lael Brainard to vice chair of the U.S. central bank, keeping consistency at the central bank as the nation grapples with the fastest inflation in decades and the effects of Covid-19.
Powell was rewarded by the White House for helping rescue the U.S. economy from the Pandemic and for protecting the recovery from a surge in consumer prices. Powell, who is a Republican, faces a smooth confirmation in the Senate, where he was backed for his first term as chair in an 84-13 vote and who he subsequently worked hard to woo.
Senate Republicans may oppose Brainard's confirmation because she would replace Richard Clarida in the vice chair slot. She was interviewed by Biden for the chair position and was seen as a strong contender for the vice chair for supervision, which is vacant.
The White House said that Biden would announce his nomination along with additional picks for open seats on the Board of Governors in early December.
How Lael Brainard compares to Powell for Fed Chair.
Powell has enjoyed bipartisan support, including from Treasury Secretary Janet Yellen and other Democrats, but progressive Democrats such as Massachusetts Senator Elizabeth Warren wanted Biden to choose someone more aligned with them on overseeing banks and battling climate change. Powell had to answer for an ethics scandal after trading Fed officials' secrets.
Biden will likely win approval from investors by ensuring continuity at the central bank as it begins withdrawing ultra-easy monetary policy amid the challenges of persistent inflation.
The economic recovery so far is a testament to the economic agenda I have pursued and the decisive action that the Federal Reserve has taken under Chair Powell and Dr. Brainard.
Biden is confident that Chair Powell and Dr. Brainard will make the economy stronger than ever before.
He said that they believed that urgent action was needed to address the economic risks posed by climate change and stay ahead of emerging risks in our financial system.
Brainard and Powell have similar views on monetary policy, but Brainard is against Powell's modest rollbacks of some of the tough curbs imposed on banks after the financial crisis.
President Barack Obama appointed Brainard as a Fed governor. Biden considered picking her as Treasury Secretary in 2020.
Brainard was a deputy national economic adviser in the White House. She became undersecretary for international affairs in 2010 after joining the Treasury.
Powell's first term was very different from his second. While the economy is recovering, inflation is running at a three-decade high, Covid-19 cases remain elevated and strained supply chains present big uncertainties.
Powell will be presiding over a committee with a number of members who want to raise interest rates sooner than he does and some officials are suggesting the Fed may need to pull back its massive asset-purchase program faster than planned.
Powell said this month that he won't consider hiking rates until the labor market shows signs of improvement.
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