Original title: Fed Chairman Powell is nominated for re-election, can he let go of his hands and prepare to raise interest rates?
Beijing Business Daily (Reporter Tang Yitian) On November 22, local time, US President Biden nominated Jerome Powell to be re-elected as Chairman of the Federal Reserve Board, and at the same time nominated Federal Reserve Board Member Brainard as Vice Chairman of the Federal Reserve.
Powell assumed the chairmanship of the Federal Reserve in February 2018. If the nomination is approved by the Senate of Congress, Powell will start a second four-year term in February 2022, and the term will be extended to January 31, 2028.
Powell was born in Washington, D.C., and received a bachelor’s degree in political science from Princeton University in 1975 and a doctorate in law from Georgetown University in 1979. He has worked in law firms, investment banks and private equity institutions for many years.
On the same day, Biden praised Powell for successfully leading the Federal Reserve to respond to the market turmoil and surge in unemployment after the epidemic, which has brought the country’s economy back to normal, and called him a “full employment believer.” Biden said that Powell will be the right person to continue to promote the recovery of the job market, while also having the ability to deal with inflation.
Judging from Brainard’s past voting records at the Federal Reserve and his public speeches, Brainard’s monetary policy is moderate, but he is relatively aggressive in terms of digital currency and bank supervision.
In terms of monetary policy propositions, Powell and Brainard both have a high tolerance for inflation, allowing the inflation rate to temporarily exceed the Fed’s long-term target. In terms of rate hike rhythm, Powell is dovish, and Brainard is more dovish. Brainard is widely regarded as the most dovish member of the Federal Open Market Committee, and if he takes office, he may maintain a relatively loose environment for a longer period of time.
With Powell’s re-election nomination, US stocks were mixed on Monday, and the S&P 500 index closed at a record. In addition, as Treasury bond yields and the U.S. dollar rose, gold futures prices fell under pressure.
At the same time, the market’s expectations for the first interest rate hike have been slightly advanced to June 2022, which is by far the most hawkish market expectation. In addition, the market expects that there will be nearly three interest rate hikes of 25 basis points each by the end of December next year. The forecast at the beginning of this month is a cumulative interest rate hike of 60 basis points.
In an interview with Bloomberg on Tuesday, Bank of America’s director of US interest rate strategy, Mark Cabana said that Powell’s door to a more hawkish stance has been opened and that monetary policy will accelerate the change.
“We expect the Fed to announce a slight acceleration of bond cuts in December, as the Fed’s forward guidance on interest rate normalization has so far lagged behind the curve,” said Winson Phoon, head of fixed income research at Maybank Kim Eng Securities.
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