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Biden to keep Jerome Powell as Fed chairman, Brainard becomes vice chairman

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Biden to keep Jerome Powell as Fed chairman, Brainard becomes vice chairman

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WASHINGTON (AP) – President Joe Biden on Monday announced he is appointing Jerome Powell to a second four-year term as Federal Reserve Chairman, endorsing Powell’s stewardship of the economy through a brutal pandemic recession in which the Fed’s ultra-low rate policies have helped boost confidence and boost the labor market.

Biden also said he would nominate Lael Brainard, the only Democrat on the Fed’s board of governors and the preferred alternative to Powell among many progressives, as vice president. The president said he would fill the three remaining positions on the board, including a vice president for oversight, a banking regulatory post, in early December.

Biden’s decision, taken after careful consideration, lends a note of continuity and bipartisanship at a time when soaring inflation is weighing on households and increasing risks to the economic recovery. By supporting Powell, a Republican who was first elevated to his post by President Donald Trump, Biden dismissed progressives’ complaints that the Fed has weakened banking regulations and has been slow to take climate change into account. in its supervision of banks.

If confirmed by the Senate, Powell would remain one of the most powerful economic leaders in the world. By raising or lowering its benchmark interest rate, the Fed seeks to slow or stimulate growth and hiring, and keep prices stable. His efforts to lead the US economy, the world’s largest, usually have global consequences.

The Fed’s short-term rate, which has been close to zero since the pandemic hit the economy in March 2020, influences a wide range of borrowing costs for consumers and businesses, including mortgages and mortgages. credit card. The Fed also oversees the country’s largest banks.

In a second term, which begins in February, Powell would face a difficult and high-risk balance: rising inflation is causing hardship for millions of families, darkening the economic recovery and undermining the Fed’s mandate to maintain. stable prices. But with the economy still more than 4 million jobs below its pre-pandemic level, the Fed has yet to fulfill its other mandate of maximizing employment.

If the Fed moves too slowly to raise rates, inflation can accelerate further and force the Fed to take more drastic action later to bring it under control, potentially causing a recession. Yet if the Fed raises rates too quickly, it could stifle hiring and economic recovery.

Powell’s re-appointment must be approved in a vote by the Senate Banking Committee and then confirmed by the entire Senate, which is considered likely.

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