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Biden keeps Powell in the Federal Reserve, with higher inflation as the main scenario
President Joe Biden kept Jerome Powell at the head of the United States Central Bank for a second term on Monday, in which he will continue to lead the search for solutions to the pandemic crisis, while dealing with the highest inflation recorded in recent times.
The designation that is expected to be ratified by the Senate, closes a long time of hypothesis about whether Biden -a Democrat-, would reappoint the Republican to the presidency, or would pay attention to the leftist pole of his party to supplant him with the Federal Reserve Officer Lael Brainard.
"Brainard will be the vice president of the most powerful central bank in the world," Biden said. While, Powell will remain in charge of the possible initiation of the increases in the cost of interest rates the following year.
"We cannot just go back to where we were before the pandemic, we want to build an even better new economy," Biden said in his address.
"I am confident of President Powell's and Brainard's vision of keeping inflation low, costs stable, and getting the job done, which will make our economy more consolidated than at any time in recent history," he added.
Powell's shares
Powell has driven the national bank's reaction to the decline caused by the pandemic, which involved reducing the interest rate on loans to zero, and injecting trillions of dollars of liquidity.
The bank has removed those backups as the economy recovers. However, inflation has risen, causing Biden's popularity in the polls to drop.
Powell also pushed for a change in the Federal Reserve's strategy. This will help keep loan costs lower for a longer time than normal. This will promote full employment, especially for minorities and the most vulnerable groups.
The president of the Reserve and other leaders of the central bank maintain that inflation will be temporary and do not anticipate increases in interest until at least the first half of next year.
"The new appointment of Powell and the appointment of Governor Brainard are not a surprise, but an indication of coherence in the national bank," says Rubeela Farooqi of High Frequency Economics.
Expense at sight
Powell, 68, was appointed by Donald Trump in 2018, when the then president chose not to give a next term to Democrat Janet Yellen.
Yellen, is currently Biden's Secretary of the Treasury. However, he has lately praised Powell's presidency, albeit without signing any hopefuls.
"Over the course of the past few years, President Powell has given the Federal Reserve strong authority to successfully face and address surprising monetary and financial difficulties," he states after the statement.
Powell should be ratified by the Senate that Biden's Democrats hold tightly to, even though investigators predict he will get multiple votes from opposition Republicans like Mitt Romney.
Biden has focused on getting legislative backing for a gigantic government welfare bill. Which will cost 1.8 trillion dollars in the next 10 years.
To do this, he really wants the votes of almost all Democrats, and to appoint a suitable chairman of the Federal Reserve, to take a stronger line on the banks.
Environmental change could be seen as a method of building support among progressives.
Brainard, the top Democrat on the national bank's governing body, was seen as the ideal person to get it all.
Little distinction
Nonetheless, Jay Bryson, a business analyst at corporate and investment bank Wells Fargo, notes that when it comes to important decisions by the Federal Reserve — when to raise interest rates, for example, the Brainard deal would likely have taken place. Little effect.
Brainard needs the approval of the Senate and if they ratify her as vice president, she would replace Republican Richard Clarida.
There are three vacant positions on the main body of representatives of the Federal Reserve, including that of vice president of supervision, a kind of banking policeman, a position that until recently was held by Republican Randal Quarles.
Biden will release the names of those who will assume these positions by early December and "is committed to enhancing diversity in the organization of the Board," the White House said.
