Biden picks Jerome Powell to lead the Fed for a second term as the U.S. battles Covid and inflation

Asia's Tech News Daily

Federal Reserve Board Chairman Jerome Powell speaks during a press conference following the January 28-29 Federal Open Market Committee meeting, in Washington, DC on January 29, 2020.Mandel Ngan | AFP | Getty Images

Jerome Powell, who guided the Federal Reserve and the nation's economy through the staggering and sudden Covid-19 recession by implementing unprecedented monetary stimulus, has been nominated for a second term as chairman of the U.S. central bank.

President Joe Biden made the announcement Monday morning following weeks of speculation that a push from progressives might see Fed Governor Lael Brainard get the spot.

Brainard instead will be vice chair of the board of governors; she had been widely expected to get a separate vice chair for supervision post, which oversees the nation's banking system. As vice chair, she would succeed Richard Clarida, whose term expires Jan. 31, 2022.

“As I've said before, we can't just return to where we were before the pandemic, we need to build our economy back better, and 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.

The nominations next head to the Senate for confirmation.

In making the decision, Biden praised the Powell Fed for its “decisive” action in the early days of the pandemic.

The Fed rolled out an unprecedented array of lending programs while also cutting interest rates back to near zero and instituting a monthly bond-buying program that would increase the central bank's holdings of Treasurys and mortgage-backed securities by more than $4 trillion.

“Chair Powell has provided steady leadership during an unprecedently challenging period, including the biggest economic downturn in modern history and attacks on the independence of the Federal Reserve,” a White House statement said. “During that time, 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.”

The announcement coincided with a modest boost to stock market futures while government bond yields were higher across the board.

Though Powell carried the day, it was not without controversy.

The Fed has been under fire lately following an ethics scandal in which multiple officials engaged in trading stocks at a time when the institution was implementing policies aimed at boosting markets. Powell disclosed that he owned municipal bonds, which the Fed also was buying, and he also bought and sold funds tied to the broad stock market indexes.

At the same time, the Fed has been hit with inflation running faster than it had anticipated – in fact, at the sharpest pace in 30 years. Official Fed policy since September 2020 has been to let inflation run somewhat hotter than the standard 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. But the recent readings have raised questions about the so-called average inflation targeting that signaled a historic turn in central bank monetary policy.

The inflation also has come with a rapid economic recovery and a decline in the unemployment rate from a pandemic peak of 14.8% to its current 4.6%.

The White House statement said the recovery is “a testament to the success of the President's economic agenda, and it is a testament to decisive action by Chair Powell and the Federal Reserve to cushion the impact of the pandemic and get America's economy back on track.”

Brainard emerged as a key force in the race over who would carry the Fed through the next four years. She has taken point on several issues important to the Biden administration, particularly the need for the Fed to brace the banking system against disruptive climate change events.

A former undersecretary of the Treasury during the Obama administration, Brainard also has been a strong proponent of a digital dollar.

The White House statement stressed the importance of progressive for the Fed in the years to come.

Biden said that Powell and Brainard “also share my deep 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.”

“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,” he added.

Biden still has more work to do on the Fed: There is one vacant position on the board of governors, while the Clarida vacancy will need to be filled come January. He also will need to name a vice chair for supervision, a post Randal Quarles had held until his term expired in October.

Political pressure, and a Covid struggle

President Donald Trump appointed Powell to the position in 2018 in somewhat of a surprise. Trump chose to pass over then-Chair Janet Yellen, an unusual move in that Fed leaders are rarely removed after just one term. Former President Barack Obama initially appointed Powell to a 14-year term as governor in 2014.

Though Trump nominated Powell, he later fired withering criticism at the Fed chief when the central bank raised interest rates seven times in 2017 and 2018. The former president went as far as to call the Fed policymakers “boneheads” for trying to normalize policy as the economy recovered.

As for Brainard, she is now widely expected to be named vice chair of supervision, a key Fed post to oversee the nation's banking system.

The Fed is empowered by Congress to fulfill two mandates: Maximize U.S. employment and keep inflation stable. Its leaders, known as 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.

To combat the spike in unemployment and recession that began in the spring of 2020, the central bank slashed interest rates and began buying some $120 billion in Treasury bonds and mortgage-backed securities every month. It also instituted a variety of lending programs aimed at keeping fixed income markets functioning after they endured significant stress at the beginning of the pandemic.

Economists credit that quick and sizable response for stabilizing financial markets and later repressing long-term interest rates. Lower interest rates make it easier for corporations to take on loans to build new factories, or for individuals to buy homes or cars. 

“Under Powell the Fed has placed more emphasis on having the economy operate at maximum employment,” Mike Feroli, chief U.S. economist at JPMorgan, said via email.

“This is a goal progressive economists have long advocated and a goal which is presumably consistent with Biden's agenda.”  

Treasury Secretary Janet Yellen, one of Biden's top economic advisors and a counselor on his Fed nominations, told CNBC earlier this month that she is happy with the Fed chief's work. Yellen was the first woman to serve as the Fed's chair and is the country's first female Treasury secretary. 

“I talked to him about candidates and advised him to pick somebody who is experienced and credible,” Yellen said. “I think that Chair Powell has certainly done a good job.” 

Powell is also popular on Capitol Hill, where lawmakers on both sides of the aisle have praised his leadership and amiability since he took over for Yellen in February 2018. 

The news is likely a disappointment to progressives including Sen. Elizabeth Warren, D-Mass., who said in September that the Fed's role in relaxing banking regulations in recent years makes Powell a “dangerous man” and that she would oppose his renomination. 

 This is breaking news. Please check back here for updates.

Internet Explorer Channel Network
Asia's Tech News Daily
News Related

OTHER NEWS

Far East, Arctic development corporation to assist Nornickel in ecology, tourism projects

According to Nornickel’s Vice President Andrei Grachev, the company’s investment program plans investments in various projects in the amount of $30 billion, where 6 billion are planned for ecology projects Read more »

Nornickel: Taimyr to host indigenous peoples' international forum in 2022

The event will be organized in the framework of Russia’s chairing the Arctic Council Read more »

WTO joint statement to enhance transparency in services industry

gettyimagesbank By Lee Kyung-min Korean firms will be able to expand their overseas business more efficiently, a move outlined in a joint initiative statement signed by 67 member countries of ... Read more »

India's services sector activity in November registers second-fastest pace of growth since July 2011: Survey

Representative image of hotel lobby. India’s services sector activity expanded at the second-fastest pace in more than a decade during November, driven by sustained rise in new work and improvement ... Read more »

(2nd LD) Nat'l Assembly passes record 607.7 tln-won gov't budget for 2022

(ATTN: ADDS finance chief’s comments, nat’l debt in last 4 paras)By Lee Haye-ah SEOUL, Dec. 3 (Yonhap) — The National Assembly passed the 2022 government budget Friday, a record high ... Read more »

Singapore retail sales rise 7.5% in October but F&B sees drop amid Covid-19 dine-in curbs

SINGAPORE – Retail sales in Singapore saw better-than-expected growth in October despite tighter Covid-19 restrictions, partly due to higher mobile phone sales from new product launches. Takings at the till ... Read more »

Daewoo Shipbuilding wins 383 bln-won order for offshore facility

By Nam Kwang-sik SEOUL, Dec. 3 (Yonhap) — Daewoo Shipbuilding & Marine Engineering Co. (DSME) said Friday it has signed a 383 billion-won (US$325 million) deal to build a wind ... Read more »

Dollar rises to 73.84 rubles on Moscow exchange

Euro moves up to 83.5 rubles Read more »

Online shopping hits record high in Oct. amid COVID-19 pandemic

SEOUL, Dec. 3 (Yonhap) — Online shopping in South Korea hit a record high in October on the back of solid demand for food delivery services and electronic goods amid ... Read more »

Imported car sales fall 31 pct in Nov. amid chip shortages

SEOUL, Dec. 3 (Yonhap) — Sales of imported vehicles in South Korea fell 31 percent in November from a year earlier as chip shortages continued to disrupt vehicle production and ... Read more »

Hiring was likely strong and employers boosted wages in November, economists say

A worker moves boxes of goods to be scanned and sent to delivery trucks during operations on Cyber Monday at Amazon's fulfillment center in Robbinsville, New Jersey, November 29, 2021. ... Read more »

China introduces restrictions for import of goods from Russia - consulate-general

Since November 29, Suifenhe railway station temporarily does not accept box railcars from Russia with goods requiring manual unloading Read more »

OPEC+ output decision due to balanced market, demand recovery, says Novak

According to the Russian deputy prime minister, such decision was made mainly due to the fact that the market was balanced, the demand was gradually recovering Read more »

Russia to scale up oil production by 109,000 barrels per day in January 2022

The next meeting of OPEC+ countries will be on January 4, 2022 Read more »

Rosatom: Northern Sea Route needs 14 icebreakers by 2030

According to Rosatom’s Deputy Director General Vyacheslav Ruksha, presently, the shipbuilding sector cannot meet the demand to satisfy the Northern Sea Route’s regular shipments Read more »

About 12 million tonnes of Taimyr coal to be shipped via Northern Sea Route after 2030

Northern Star’s project is the development of a coal deposit. The capacity at the initial stage would be 5 million tonnes a year, and the annual capacity by 2032 will reach up to 20 million tonnes Read more »

Kremlin credits ‘special' 2022 gas price for Belarus to privileges under integration deals

Based on the deal inked by the two parties, the fuel price for Minsk for 2022 was set at $128.52 per 1,000 cubic meters Read more »

Rosatom: Sibir nuclear-powered icebreaker expected in Kara Sea in January

The Sibir nuclear-powered icebreaker is the second vessel of Project 22220, built by the Baltic Shipyard Read more »

OPEC+ ministers discussing base plan of oil production recovery

OPEC+ member-states are restoring oil production at the pace of 400,000 barrels per day since August and this plan is the base one Read more »

National Assembly ratifies RCEP trade pact

SEOUL, Dec. 2 (Yonhap) — South Korea’s parliament on Thursday ratified the Regional Comprehensive Economic Partnership (RCEP), a regional free trade agreement that encompasses about one-third of the world’s gross ... Read more »

U.S. weekly jobless claims total 222,000 vs. 240,000 estimate

Initial claims for unemployment insurance rose last week but held at levels consistent with how the job market looked before the Covid-19 pandemic devastated the U.S. jobs picture, the Labor ... Read more »

OPEC+ monitoring committee makes no recommendation for January production level

The ministerial conference to start soon Read more »

OPEC+ monitoring committee starts discussing January plan — source

The ministers also to touch on the oil market report prepared by the OPEC+ technical committee the day before Read more »

Wildberries enters Turkish market

The company offers buyers in Turkey about 5.6 mln items of goods from 163,000 international brands Read more »

Focused discussion of Union State's common currency not underway, says Kremlin

According to Dmitry Peskov, the integration stage "does not imply the introduction of the common currency" Read more »

Framework for creation of common digital space established in EAEU, says Russian PM

"The creation of a whole ecosystem of digital projects, independent and integrated, which will enhance the integration cooperation, lies ahead," Mikhail Mishustin said Read more »

RSV Mikhail Somov returns from Northern Sea Route ice trap to home port

The ship has delivered cargo to 32 stations Read more »

(2nd LD) S. Korea's Q3 economic growth unchanged at 0.3 pct: BOK

(ATTN: ADDS GNI figures in last 3 paras)By Koh Byung-joon SEOUL, Dec. 2 (Yonhap) — South Korea’s economy grew at the same pace as earlier forecast in the third quarter ... Read more »

Hainan's Haikou Meilan International Airport opens new terminal

Its area of the terminal is almost 300 thousand square meters Read more »

Inflation woes grip Korean economy

Deputy Prime Minister and Finance Minister Hong Nam-ki. Korea Times file Consumer prices jump at fastest pace in nearly 10 years By Lee Kyung-min The much-dreaded persistence of inflation is ... Read more »

China property market to keep cooling into H1 2022 on tight curbs: poll

The property sector, a key driver of growth in the world’s second-largest economy, has slowed sharply in recent months. BEIJING (REUTERS) – China’s property downturn is expected to continue into ... Read more »

FSS chief meets with asset management leaders

Financial Supervisory Service (FSS) Governor Jeong Eun-bo, fifth from right, stands next to CEOs of local asset management companies who participated in the meeting held at Kensington Hotel in Seoul’s ... Read more »

Dollar rises to 74.75 rubles

The euro increased by 47 kopecks and reached 84.15 rubles Read more »

Indian companies raise $1.34 billion from foreign markets in October; down 34% from last year, says RBI

Indian companies raised nearly $1.34 billion from foreign markets in October this year, down 34 percent from the year-ago period, Reserve Bank of India (RBI) data showed on December 1. ... Read more »

OPEC+ ministers will assess oil output plan for January amid new coronavirus variant

So far, oil exporters, which account for around 40% of world oil output, have been recovering oil production at an equal pace since August Read more »

(3rd LD) Inflation growth hits 10-year high in Nov. amid rising oil prices

(ATTN: ADDS more details in paras 21-24; REWRITES lead)By Kim Soo-yeon SEOUL, Dec. 2 (Yonhap) — South Korea’s consumer prices rose at the fastest pace in nearly 10 years in ... Read more »

South Korea inflation accelerates to decade-high in November

Consumer prices in South Korea rose 3.7 per cent in November from a year earlier, exceeding all economists estimates. SEUOL (BLOOMBERG) – South Korea’s inflation accelerated to the fastest pace ... Read more »

(LEAD) S. Korea's Q3 economic growth unchanged at 0.3 pct: BOK

(ATTN: UPDATES with BOK official’s briefing in last 8 paras; ADDS photos)By Koh Byung-joon SEOUL, Dec. 2 (Yonhap) — South Korea’s economy grew at the same pace as earlier forecast ... Read more »

Opec+ faces output decision as Omicron puts market in disarray

Oil futures sank further to US$65 a barrel in New York on Dec 1, 2021. NEW YORK (BLOOMBERG) – Opec and its allies headed into a second day of talks ... Read more »

[Contribution] What can we expect in post-pandemic Korea?

Alicia Garcia Herrero By Alicia Garcia Herrero After a long fight against the COVID-19 pandemic, Korea has started to open up recently by making international travel possible albeit still difficult. ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic