Biden still undecided on Jerome Powell’s appointment as Fed chief

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President Biden Tuesday declined to say if he plans to rename Jerome Powell as chairman of Federal Reserve as soaring inflation and worsening labor shortages weigh on the economy’s recovery from the coronavirus pandemic.

Speaking in Glasgow, Scotland, at the United Nations climate change summit, known as COP26, Biden told reporters he had yet to make a decision on who to attend. address to lead the US central bank for the next four years. He declined to say what criteria he was looking for in a candidate who will become one of the most powerful economic figures in the world, but promised to announce a decision that would ensure enough time in the Senate to approve the candidate.

“I’m not going to discuss this with you because it’s ongoing now, we’ll be making those announcements pretty quickly. It’s been going on for a while,” Biden said. “I think we’ll have plenty of time to make sure all the top candidates are cleared in time before terms expire.

Powell, a trained lawyer and former Republican Treasury official, is generally respected on Wall Street and beloved by lawmakers on both sides for guiding the United States through the coronavirus pandemic. But the White House Still considering whether to call on Powell to lead the Fed for another four years – one of the most important economic decisions for Biden – before his official term ends in February 2022.

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The Fed chairman is one of Washington’s most powerful players, with the ability to dictate the pace of economic growth, and is usually appointed for a second term, often to strengthen the central bank’s independence from to politics.

But Powell has recently been criticized by some progressive groups on issues such as financial regulation and climate change, making his appointment much less secure than it was just a few months ago.

President Biden addresses a press conference at the COP26 United Nations Climate Change Conference in Glasgow on November 2, 2021. World leaders meeting at the COP26 climate summit in Glasgow will issue a multibillion-dollar pledge dollars to end deforestation by 2030 but t (BRENDAN SMIALOWSKI / AFP / Getty Images)

“I’ve thought about it a lot,” Biden said Tuesday. ” I met [with] macroeconomic advisers on the best choices. We have a lot of good choices. But I’m not going to speculate now. “

Senator Elizabeth Warren, D-Mass., Last month became the most prominent lawmaker to oppose Powell’s re-appointment, arguing that under his tenure the central bank took “many steps to weaken” the supervision of banks, including overhauling Act’s Dodd-Frank Volker rule, revamping the stress tests of big banks and allowing lenders to increase investment in venture capital.

“Your case worries me a lot,” Warren told Powell at a Senate Banking Committee hearing. “You have acted time and again to make our banking system less secure. And that makes you a dangerous man to run the Fed.”

At the same time, Powell is said to have secured a key endorsement from Janet Yellen, now Secretary of the Treasury, increasing his chances of a second term, given his nearly two decades of experience at the Fed, including four years as head of the central bank. Yellen also worked directly with Powell, who served as Fed governor during his tenure. (In 2018, Powell replaced Yellen as the head of the Fed, making her the first president not to be re-elected after a first full term.)

“I told him about the candidates and advised him to pick someone with experience and credibility,” Yellen told CNBC on Tuesday. “I think President Powell has certainly done a good job.”

Federal Reserve Chairman Jerome Powell speaks at the National Association for Business Economics conference in Denver on Tuesday, October 8, 2019 (AP Photo / Thomas Peipert)

The White House move comes as Fed policymakers wonder how and when to start rolling out some of the super-easy monetary policies put in place to support the U.S. economy during the pandemic. Most Fed officials agreed last month that they could start slowing down their aggressive bond buying program as early as mid-November, the first step they will take in restoring support to the American economy.

The minutes of the U.S. central bank meeting on September 21-22 show that policymakers are ready to start gradually reducing the $ 120 billion in monthly bond purchases, a policy known as “quantitative easing” designed to keep credit low, at their November meeting, which takes place this week.

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“Participants generally felt that, provided the economic recovery remains on track overall, a phase-down process that was completed by the middle of next year would likely be appropriate,” he added. . minutes, released last week, said. “Participants noted that if a decision to start cutting back on purchases is made at the next meeting, the downsizing process could begin with monthly buying schedules starting in mid-November or mid-December.”

Policymakers have said they plan to complete the reduction process by July next year, about a month or two earlier than expected. Economists widely expect Fed officials to announce cuts after their November meeting on Wednesday.


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