Biden faces key decision on whether to reappoint Federal Reserve Chair Powell
July 21, 2021. Summarized by summa-bot.
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WASHINGTON, DC - JUNE 22: Federal Reserve Board Chairman Jerome Powell testifies at a House Coronavirus Subcommittee hearing on the Federal Reserves response to the Coronavirus Pandemic on Capitol Hill June 22, 2021 in Washington, DC. Powell spoke about the nation's recovery from the pandemic and that inflation has risen because of it. (Photo by Graeme Jennings-Pool/Getty Images)
President Joe Biden soon faces the same decision his most recent Democratic predecessors did: whether to reappoint a Federal Reserve chair put in that job by a Republican.
(CNN)President Joe Biden soon faces the same decision his most recent Democratic predecessors did: whether to reappoint a Federal Reserve chair put in that job by a Republican.
Of special significance at the moment, Powell's view that the current burst of inflation will be only temporary tracks the view of Biden's economic team -- even though that team includes economists significantly more liberal than the onetime private equity executive.
Asked last week about growing inflation concerns, one Biden economist told CNN: "I'm where Powell is. "
"As I made clear to Chairman Powell when we met recently, the Fed is independent," the President said.
Powell was first nominated to a seat on the Fed's Board of Governors by Obama when Biden served as his vice president.
Powell won Senate confirmation overwhelmingly, with lopsided support from Democrats and Republicans alike.
Powell's professional background and selection by Trump will present an inviting target for some progressives such as Sen. Elizabeth Warren of Massachusetts -- who voted against his confirmation as Fed chair and criticized him as too cozy with big banks at a hearing last week.
Moreover, Biden's emphasis on bringing the country together wherever possible suggests a potential benefit from extending the tenure of a Republican-appointed chair whose views largely align with those a a Democratic administration.
Democratic presidents, as reflected by the initial Fed chair picks of both Clinton and Obama, have felt a special need in recent decades to demonstrate moderation on economic management.
And the fact that Biden can make additional Fed appointments at the same time means he could balance Powell's renomination with those of more progressive choices.