President Joe Biden on Monday said his renomination of Jerome Powell to head the Federal Reserve would bring stability to the nation’s central bank as the U.S. continues to recover from the pandemic, rejecting calls that the institution needs “fresh blood.”
The White House early Monday announced that Biden would be renominating Powell — who was first picked by ex-President Donald Trump — to run the Fed and tapping Lael Brainard for the bank’s No. 2 role. With the exception of some progressive lawmakers like Sen. Elizabeth Warren, a Massachusetts Democrat, the choice of Powell is being seen as winning approval on Capitol Hill.
“We expect this pair to win quick Senate confirmation, and we view this decision as a market positive, especially for banks
” said Ed Mills of Raymond James in a note.
In an apparent answer to critics like Warren, Biden said “we need stability and independence at the Fed,” and added that fighting climate change will be one of Powell’s top priorities.
Speaking after Biden, Powell said he and his colleagues would use their tools “both to support the economy and a strong labor market, and to prevent higher inflation from becoming entrenched.”
Brainard addressed inflation as well, saying she will put working Americans at the center of her job and pledging a “durable recovery.”
The announcements come as Biden’s approval ratings are taking a blow from inflation, and the president’s decisions are poised to have far-reaching consequences for him as well as the economy.
“Powell’s renomination is an endorsement by President Biden of the Fed’s pandemic response and post-pandemic escape plan,” said Jon Lieber of Eurasia Group in a note. “This means Biden now owns politically the policies of the Powell Fed and its consequences,” Lieber said.
With midterm elections approaching next year, Republicans are attempting to use inflation as a cudgel over Biden. Sen. Rick Scott of Florida, who heads the GOP’s Senate-campaign arm, recently told The Wall Street Journal that continued inflation is a “gold mine” for his party.
Warren said in a statement that she would vote against Powell and support Brainard — and also urged Biden to move fast on another key Fed appointment.
“Powell’s failures on regulation, climate, and ethics make the still-vacant position of Vice Chair of Supervision critically important,” she said. “This position must be filled by a strong regulator with a proven record of tough and effective enforcement — and it needs to be done quickly.”
Powell, a Republican, has also come in for criticism from Warren’s fellow Democratic Sens. Sheldon Whitehouse of Rhode Island and Jeff Merkley of Oregon.
“President Biden must appoint a Fed chair who will ensure the Fed is fulfilling its mandate to safeguard our financial system and shares the Administration’s view that fighting climate change is the responsibility of every policy maker. That person is not Jerome Powell,” the two senators said in a statement on Nov. 19.
Biden called Powell’s leadership “steady and decisive” in stabilizing markets and helping the economy recover from the COVID-19 pandemic. The chairman’s nomination is expected to draw support from Republicans as well as Democrats, with Senate Minority Leader Mitch McConnell, a Kentucky Republican, reportedly ready to back Powell.