MILANO – The race for the presidency of the Federal Reserve ends with a compromise: Joe Biden confirms it Jerome Powell as president of the American Central Bank, for a second term, but appoints his number one rival, Lael Brainard to the vice presidency. The news was given by the White House itself.
The choice of the Biden administration is therefore for continuity despite the fact that the pressures – especially from the democratic side – for a discontinuity and the choice of someone who would put greater pressure on banking regulation and climate change had increased in recent times. “If we are to continue building on this year’s economic success we need stability and independence at the Federal Reserve. And I have full confidence, following their trial by fire over the past 20 months, that President Powell and Dr. Brainard will provide the strongest. leadership our country needs, “Biden said.
Fed, Biden’s toughest choice between Powell and Brainard
by our correspondent Paolo Mastrolilli
The president acknowledged the re-elected governor as “decisive leadership” during the coronavirus crisis. As for Brainard, he will take up the position held by Richard Clarida until January 31st. “I am confident that President Powell and Dr. Brainard’s focus on keeping inflation low, prices stable and maximum employment will make the economy stronger than ever,” Biden said. The appointments must be confirmed by the Senate.
As the Wall Street Journal notes, this puts an end to the whirlwind of indiscretions on one of the most important seats for the global economy: the Senate expects a bipartisan confirmation for Powell, given that of the 84 senators who had voted for him four years ago are, 68 are still in office, divided between the two sides.
Powell’s is not a comfortable chair these days. The American central bank is grappling with the gradual closing of the taps that have flooded the market with liquidity. But the strong fiscal and monetary policy reaction to the pandemic has generated a rebound that has exceeded expectations, with global supply chains unable to keep up with demand: the gallop in prices, in the first place of materials. energy primes, according to many, should prompt the Fed to tighten early rates. The choice is not easy, because every decision risks turning out to be a boomerang: the rate cut could be premature, should the difficulties of the supply chains recede and the flare-up in prices proves to be temporary; or the reaction could turn out to be late, should the rise in wages start an inflationary cycle that is then difficult to contain.