US President Joe Biden taps Jerome Powell to serve a second term as chair of the US Federal Reserve, allowing him to keep leading the response to the economic damage caused by Covid-19 while dealing with a wave of record inflation.
The nomination, expected to win confirmation by the Senate, ends weeks of speculation over whether Biden, a Democrat, would reappoint the Republican chair, or heed calls from the left wing of his party to replace him with a candidate like Fed Governor Lael Brainard.
Instead, Brainard will serve as vice chair of the world’s most influential central bank, Biden says, while Powell will remain in the driver’s seat, presiding over the rollback of its pandemic stimulus and the likely beginning of rate hikes next year.
“We can’t just return to where we were before the pandemic, we need to build our economy back better,” Biden says 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.”
Powell has led the central bank’s response to the massive pandemic downturn, which saw it slash its lending rate to zero and roll out trillions of dollars in liquidity.
The bank has pulled back those measures as the economy has recovered, but inflation has also spiked, fueling a drop in Biden’s approval ratings.
However, Powell also led a change in policy at the Fed to keep interest rates lower for longer than normal to spur full employment, particularly for minorities and groups that are often disadvantaged.
The Fed chair and other central bank leaders argue the inflation wave will prove temporary and have said they do not foresee rate hikes at least until the middle of next year.