Powell’s four-year term is up in February, and the President faced a key decision of whether to keep Powell, who was put in the job by a Republican, in the government’s most important economic policy job.
At a time when rising consumer prices, inflation and shortages caused by the supply chain crisis are urgent concerns of the White House, there has been heightened focus on who the President was going to pick to lead the nation’s central banking system.
The White House cited Powell’s “steady leadership” amid the economic turbulence of the pandemic as a reason for the decision.
Economic recovery, the White House said in a statement, “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.”
Biden expressed his “full confidence” in Brainard and Powell in a statement.
“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. Together, they 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,” Biden said.
Biden recently met with Powell and Lael Brainard, a Federal Reserve governor, separately at the White House as he weighed his decision, CNN previously reported. Brainard had been viewed as the leading contender if the President decided against Powell for a second term.
“We’ve got a lot of good choices,” Biden said during a recent trip to Scotland. The President said he had been meeting with his economic advisers and “given a lot of thought to” who his next Fed chair should be.
Powell, who will again need Senate confirmation to serve in the top job, has faced significant opposition from some progressive Democrats, who criticize his track record on financial regulation.
Sen. Elizabeth Warren of Massachusetts said at a recent Senate hearing that Powell was a “dangerous man to head up the Fed” and that he has “regularly voted to deregulate Wall Street.” She said a Republican majority at the Fed under Powell’s leadership could “drive this economy over a financial cliff again.”
But some key Democratic constituencies, such as organized labor, have signaled their support for him. Powell won Senate confirmation overwhelmingly for the position in 2018.
The chair’s renomination comes at a time of tumult on the Board of Governors and a trading scandal that had threatened to block Powell from being picked for a second term.
The Fed recently unveiled sweeping changes to its ethics practices in response to the scandal about personal stock trading by then-regional Fed Presidents Robert Kaplan and Eric Rosengren, who led the Dallas and Boston Feds, respectively. Both Kaplan and Rosengren announced early retirements amid criticism about their trades.
Powell, a Republican, was nominated to the Fed’s Board of Governors by then-President Barack Obama. He was elevated to chair by then-President Donald Trump in November 2017 to succeed Janet Yellen, who is now Biden’s treasury secretary. His term as a member of the Board of Governors doesn’t expire until January 2028.
He has been leading a widespread emergency market rescue in response to the economic crisis that followed the coronavirus pandemic.
Though the US has made considerable gains — its economy beat expectations and added 531,000 jobs in October — there are still millions of people sitting on the sidelines of a tight labor market.
This is a breaking story and will be updated.
