Joe Biden has renewed Jerome Powell as head of the American central bank (Fed), offering the number two position to Lael Brainard, who was pushed by the left wing of the Democrats, thus marking a desire for continuity and consensus within of his party.
Jerome Powell is “the right person” to guide the Fed, said Joe Biden, Monday, during a speech at the White House, along with Mr. Powell and Mr.me Brainard, as the United States faces its worst inflationary surge in 30 years.
“We need stability and independence at the Federal Reserve,” stressed the US president. He praised the action of “Jay” Powell, a Republican, over the past four years, and in particular the way in which he had resisted the regular attacks of former President Donald Trump against him.
“This is just one of the many reasons Jay enjoys support from all walks of life,” said Joe Biden, deeming “important to have a Fed leadership that enjoys broad bipartisan support.”
With the appointment of a Republican as president of the Fed and of a Democrat as vice-president, Joe Biden hopes to spare the different sensitivities of his party, in the midst of negotiations for the adoption in Congress of his plan for social and environmental reforms. .
This appointment is one of the most important economic decisions of the mandate of the President of the United States. Long awaited, it had however, this time, taken on a political aspect more than an economic one.
The Senate will now hear the two officials, then vote to confirm or not their appointments, first in the banking committee and then in plenary session.
Climate change
Jerome Powell said on Monday that the Fed would act so that inflation does not “take root.” He also mentioned the priority of fighting “against the evolution of risks linked to climate change”, a change of tone which seems to have been dictated to him by the White House.
Joe Biden has indeed estimated that the American central bank should be “leader” in the taking into account of this risk, responding to the calls of the left wing of the Democrats, who called not to renew Jerome Powell because of his judged action too weak in this area.
Lael Brainard, on the other hand, had made it one of his favorite themes. During her speech, she mentioned the fight to be waged against inflation, but also the need to “support economic growth that can include everyone”, and an economy “sustainable for future generations”.
But some senators regretted the choice of Joe Biden, such as Democrats Sheldon Whitehouse and Jeff Merkley, for whom the president of the Fed must ensure “the protection of our financial system, and [partager] the government’s view that the fight against climate change is the responsibility of every policy maker ”.
“This person is not Jerome Powell,” they lamented in a statement Monday.
Senator Elizabeth Warren even announced that she would vote against his reappointment, citing her “regulatory, climate and ethical failures.”
Diversity
“I trust them [Powell et Brainard] and I think they will have broad support from Congress and the people, ”Treasury Secretary and Fed Chairman Janet Yellen commented on CNBC.
Jerome Powell, 68, has headed the Fed since 2018. This lawyer and former multimillion-dollar investment banker was appointed governor by Barack Obama in 2012, then promoted to president by Donald Trump in 2017. He should have sufficient support. in the Senate.
Lael Brainard, 59, is less consensual, and is particularly in favor of strict banking and financial regulations. She will replace current Fed vice president Richard Clarida, whose term expires on January 31.
Other appointments should be announced in early December, in particular for a key post in the institution, that of vice-president in charge of banking supervision. The White House on Monday promised “more diversity”.
The Fed, which is the most powerful central bank in the world, decides the country’s monetary policy, and monitors and regulates the financial sector. Its decisions can boost or slow down US economic activity by fixing the cost of credit, affecting the dollar and thereby all financial markets.