WASHINGTON – President Joe Biden said Monday he is nominating Jerome Powell for a second four-year term as Federal Reserve chair, endorsing his stewardship of the economy through a brutal pandemic recession in which the Fed's ultra-low rate policies helped bolster confidence and revitalize the job market.
Biden also said he would nominate as vice chair Lael Brainard, the lone Democrat on the Fed's Board of Governors and the preferred alternative to Powell among many progressives.
His decision strikes a note of continuity and bipartisanship at a time when surging inflation is burdening households and raising risks to the economy's recovery.
In backing Powell, a Republican who was elevated to his post by President Donald Trump, Biden brushed aside complaints from progressives that the Fed has weakened bank regulation and has been slow to take account of climate change in its supervision of banks.
“When our country was hemorrhaging jobs last year, and there was panic in our financial markets, Jay's steady and decisive leadership helped to stabilize markets and put our economy on track to a robust recovery,” Biden said, using Powell's nickname.
In a second term that begins in February, Powell would face a difficult and high-risk balancing act.
Inflation has reached a three-decade high, causing hardships for millions of families, clouding the recovery and undercutting the Fed's mandate to keep prices stable.
But with the economy still 4 million-plus jobs shy of its pre-pandemic level, the Fed has yet to meet its other mandate of maximizing employment.
Next year, the Fed is widely expected to begin raising its benchmark interest rate.
If it moves too slowly to raise rates, inflation may accelerate further and force the central bank to take more draconian steps later to rein it in, potentially causing a recession. Yet if the Fed hikes rates too quickly, it could choke off hiring and the recovery.