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Federal Preparatory Board Prime Minister Powell enjoys helping with the reappointment, but he’s not rock

President Biden’s choice of the next Federal Reserve chairman will either maintain the current chief, who has gained widespread support from the market and members of both parties, or make him one of his reputable colleagues. It is likely to be a replacement choice.

Chairman Jerome Powell, whose term expires in February, is considered by many inside and outside the administration to be a prime candidate for the job. But if Mr Biden decides to prefer his own choices over the Republicans elected by President Trump, Federal Reserve Board Rael Brainard is most likely to succeed him.

“The president will work with the senior economic team in a cautious and thoughtful process to appoint the Fed’s chair in a timely manner,” a White House official said.

The White House refused to comment on certain names that may have been considered for both the chairman of the Federal Reserve Board and the other vacancies of the seven boards. “The president will appoint candidates he considers to be the most effective in managing monetary policy,” a White House official said.

Executive officials discuss future choices with Mr. Biden in consultation with his best economic advisers, including Treasury Secretary Janet Yellen, Chairman of the Cecilia Rouse Economic Advisory Board, and Chairman of the National Economic Advisers Brian Deese. Said. White House Chief of Staff Ron Klain is likely to play a leading role in overseeing the search.

Powell and Brenard declined to comment.

Some Democrats want Mr Biden to replace Mr Powell. They prefer the White House to nominate women or minority members to lead central banks as part of the broader promotion of diversity at the top ranks of the US government. “Apart from my policy differences from the Fed’s current leaders, reappointing a conservative white man to the Fed’s chair would have missed a big opportunity,” said Graham Steell, a former Democratic Senate aide. Said. I wrote in a tweet last year.Biden announced his intention to nominate Steele on Monday Treasury Top Post..

Some believe Powell’s Fed is too vulnerable to banking regulation and wants the central bank to play a more important role in addressing the risks of climate change. Powell argued that if the central bank participated in a hotbutton policy struggle where US voters and lawmakers had not reached an agreement, the central bank would jeopardize its political autonomy.

Dennis Kelleher, CEO of Better Markets, a Washington-based group working to tighten financial regulations, said: “Similarly, if climate is one of your most important priorities, Jay Powell is not the leader the Fed needs.”

Fed Governor Lael Brainard, shown in 2019, is seen as the most likely candidate to replace Powell, whose term expires in February, if President Biden asks for a change.


Photo:

eric baradat / Agence France-Presse / Getty Images

At the hearing last week, Senator Elizabeth Warren, Democratic Party of Massachusetts, accused Powell’s record of deregulation. Senator Sherrod Brown (D., Ohio), who oversees the confirmation of the next Fed chairman, made a similar criticism of Powell. Neither made a statement about whether to support or disagree with the second phase.

Powell, Lawyer with a career in financeWas appointed to the Fed’s board of directors by President Obama in 2012, before Mr. Trump.

Tapped him Chairman for 4 years from 2018. The outlook for the second term victory looked dim after it was maintained. Wither attack From Mr. Trump for the first two years of his term.

However, his position has been strengthened in recent months as lawmakers and economists from both parties praised his record and the awkward economic background increased the risk of leadership reforms at central banks.

“It’s not that there aren’t many other great people, but Jay Powell’s reappointment will be a very encouraging sign to the US economy and the world that the Fed is in the hands of strong and responsible adults,” said the person in charge. Said. .. DonBeyer, (D., Va.), Chairman of the Joint Economic Committee.

Several government officials, including Yellen, have praised the Fed’s performance during the pandemic and endorsed Powell’s general policy approach, according to public comments.

A Republican member of the House Financial Services Commission, who often opposed Powell’s predecessor, gave him unconditional support last week. At the beginning of last week’s two-day hearing, North Carolina General Assembly member Patrick McHenry, a top Republican member of the Commission, said, “You have another term as chairman of the Federal Reserve Board and deserve it. “.

More than three in four economists surveyed this month by The Wall Street Journal expect Powell to be offered a second term, and 86% of respondents believe Powell won it. ..

Meanwhile, some progressive economists praise his leadership in transforming the Fed’s approach to setting interest rates more focused on the central bank’s mission to secure maximum employment.

“”
“It’s not automatic for someone parachuting down to direct the committee in the direction they want, and the market may be worried about this.”


— Cornerstone Macro Analyst Roberto Perli

William Spriggs, chief economist at the AFL-CIO Union Federation, said he was concerned that progressives had “memory loss” about how difficult it would be to secure this policy shift. It was. “I sympathize with Powell’s reappointment because it sends a message of stability and a reaffirmation of what he did. This policy consensus is still fragile,” Spriggs said. “Economics experts haven’t changed much. It’s too early for progressive to make a winning lap.”

Difficult US Economic Environment —Strong economic growth When High unemployment rate And High inflation— Complicate your decision. Changing the chair of the Federal Reserve Board poses two potential risks. It undermines the rattling of the market, which appears to be content with Powell’s leadership, and the consensus within the central bank for his policy approach.

Powell said he promised to maintain the Fed’s monetary easing policy until the labor market recovered further, and he believed that inflation had skyrocketed. For temporary reasons.. Some Fed officials and outside critics are concerned that this stance is driving inflation, and even if it slows economic and employment growth, the Fed will curb price pressures. Should begin to withdraw support for the economy. However, stock prices remain high, bond yields remain historically low, and investors generally believe that Powell will do what it takes to get the recovery on track and keep inflation under control. It shows that.

“It’s important to get financial market support,” said Roberto Perli, a former Fed economist who is now an analyst at Cornerstone Macro. “It’s not automatic for someone parachuting down to direct the committee in the direction they want, and the market may be worried about this.”

The White House is uncertain whether the replacements will be in the same position. Dean Baker, co-founder of the Liberal Center for Economic Policy Research, said: In 2003 and 2013, Baker co-authored a book on full employment with Biden’s longtime economic adviser Jared Bernstein.

Federal Reserve Board Chair Jerome Powell explained the outlook for inflation in the US economy, saying there are signs that rapidly rising prices will stop rising and retreat. Credit: Al Drago / Associated Press (Video from 6/16/21)

Powell’s critics on the left aren’t coalescing behind alternative candidates, but Brenard is in the best position to maintain Powell’s interest rate policy continuity while promoting stronger regulation. It is seen by outsiders as being in.

Brenard, an economist and Democrat appointed to the Fed’s board by Obama in 2014, was Powell’s key ally in monetary policy.she was Reliable lieutenant About last year’s central bank crisis response. However, she regularly opposes his decision to relax certain banking regulations enacted after the 2008 financial crisis.

While it may raise more questions in the market about the direction of monetary policy, other candidates for this job may emerge in the coming weeks.

What’s Next for the Federal Reserve?

Read more articles about central banks selected by WSJ editors

Powell’s fate depends in part on how the White House manages other Fed appointment combinations, according to people close to the administration. The seven committees of the Federal Reserve Board already have one vacancy. And there’s at least one more in February after the Fed’s Vice-Chairman Richard Clarida’s term has been set to expire. In addition, the four-year term of Vice Chairman of Banking Supervision held by Randall Qualls will end in October. Quarles could choose to remain on the board as governor.

As a result, the White House has at least two, and in some cases three, additional posts in addition to the Fed’s chair. That is, the authorities need to stitch together the slate of potential candidates.

Yellen, who chaired the Fed from 2014 to 2018, believes he has played a particularly influential advisory role. When Yellen was chairing, Powell and Brenard served on the board, giving a particularly informed view of the candidate’s strengths and weaknesses.

Yellen is familiar with the delicate process of choosing a Fed leader. Obama strongly considered appointing former Treasury Secretary Lawrence Summers to the post until a Democratic senator signaled he wouldn’t support him. Instead, he promoted Mr Yellen, then Vice-Chairman of the Federal Reserve Board. By tapping Powell for work four years later, Mr. Trump has a tradition that the president, who praises stability, has reappointed the chairman of the Federal Reserve Board, appointed by the predecessor of another party. Defeated.

Sarah Binder, a professor of political science at George Washington University, said Powell could collect far more votes in the Senate, ranging from 65 to 80 votes, than in the Democratic Party. “I admitted that I only needed 50 people, but I don’t think most presidents, especially Biden, are eager to be someone with a partisan squeak in the confirmation war,” she said. It was.

Baker of the Center for Economic Policy Research said Powell believes it is well suited to achieve what many Democrats want, a low interest rate policy that prioritizes lower unemployment. “That’s the story of Nixon going to China,” he said.

Powell’s replacement is “a huge risk and I don’t know why Biden wants to take it,” he said.

Write to Nick Timiraos nick.timiraos@wsj.com And Andrew Restuccia andrew.restuccia@wsj.com

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Federal Preparatory Board Prime Minister Powell enjoys helping with the reappointment, but he’s not rock

Source link Federal Preparatory Board Prime Minister Powell enjoys helping with the reappointment, but he’s not rock

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