After weeks of deliberation between government leaders, the decision for the Federal Reserve Chair has been made. The race between Jerome Powell, a Republican, and Lael Brainard, a Democrat, started to tighten up in the past few days with reasons to elect both on the political and economic end.
With the decision up to President Biden, he decided to appoint incumbent chair Jerome Powell for a second term, lasting until 2026, with bipartisan support on the decision. Progressive Democrats continued to express their opposition to Powell, but they supported Biden’s decision to make Brainard the vice chairwoman of the Fed, which balanced things in a sense.
Biden’s decision to stick through with Powell reflects his and his team’s view on the economy now. They are completely focused on the social spending bill that needs to pass through the Senate, and they felt that stability was necessary at the Federal Reserve. According to Biden, he and Powell discussed how the Fed can help fight climate change, regulate nonbanks and cryptocurrencies, and most importantly fight inflation. The keys are now in Powell’s hands to decide when to raise interest rates with his colleagues and mistiming it could hurt a lot. It’s possible that inflation will go away naturally, removing the incentive to raise rates, but if it’s a thing to stay, then the economy would struggle without an increase in interest rates. There’s a lot of hard work to do, and the social spending bill could add to these struggles, but it’s important that we are confident in Powell as he has taken us so far in the last few years. Do you believe this is the right decision?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.