Corrected 1:39 p.m. | President Joe Biden said Monday he plans to stick with Jerome Powell as Federal Reserve chair, supporting continuity in leadership as annual inflation topped 6 percent last month in the fastest increase in three decades.
Biden praised the Republican’s handling of the economy during the pandemic and stressed the importance of stability and independence on the board. The president also nominated board member Lael Brainard, a front-runner for the top job favored by progressives, to take over as the Fed’s vice chair. That position is currently held by Richard H. Clarida, whose term expires on Jan. 31.
During a speech Monday afternoon, Biden addressed critics who would have preferred he nominate a Democrat.
“Put directly, at this moment of both enormous potential and enormous uncertainty for our economy, we need stability and independence at the Federal Reserve. Jay has proven the independence that I value in the Fed chair,” Biden said of Powell. “In the last administration, he stood up [to] unprecedented political interference, in doing so successfully maintained the integrity and credibility of this institution.”
Nominating someone with bipartisan support would guard against the politicization of the regulator, the president added. The Senate voted 84-13 to approve Powell to lead the Fed in 2018. Biden’s vice president, Kamala Harris, was among those who cast a vote against him.
“I believe having Fed leadership with a broad bipartisan support is important, especially now in such a politically divided nation,” Biden said. “I believe we need to do everything we can to take the bitter partisanship of today’s politics out of something as important as the independence and credibility of the Federal Reserve. This is vital to maintain public trust in an independent institution like the Federal Reserve.”
Biden also praised Brainard for her tenure on the Fed, which she joined in 2014, highlighting her work on financial risk posed by climate change.
The president also promised to put forward diverse candidates to fill three vacant and soon-to-be vacant seats on the seven-member board.
“While Jay And Lael bring continuity and stability to the Fed, my additions will bring new perspectives and new voices. I also pledge that my additions will bring new diversity to the Fed, which is much needed and long overdue,” Biden said, adding that he would announce those nominees in the coming weeks.
Congressional Democrats have been pleased with Powell’s handling of the monetary policy during the pandemic, though progressives have disagreed with his stances on bank regulation and workforce participation.
Democratic and Republican leaders on the Senate Banking Committee, Powell’s first stop in the Senate on his road to confirmation, said they support his nomination.
“Chair Jerome Powell has led our economy through a historic pandemic, and under his and President Biden’s leadership, unemployment has fallen and workers are seeing increased bargaining power,” Banking Chairman Sherrod Brown, D-Ohio, said in a statement. “I look forward to working with Powell to stand up to Wall Street and stand up for workers, so that they share in the prosperity they create.”
Brown previously pressed Powell on the importance of reaching full workforce participation before easing the measures the Fed took to support the economy during the pandemic.
“Full employment means a truly competitive labor market – one where everyone can get a job, and employers compete for workers. We have not seen that kind of labor market in decades, but we can. That is our job — in Congress, at Treasury, at the Fed,” Brown said at a September hearing.
The panel’s ranking member, Sen. Patrick J. Toomey, R-Pa., said he would support Powell’s confirmation, though he disagreed with his recent monetary policy decisions as annual inflation ballooned last month.
“While I have strongly disagreed with Chairman Powell’s decision to continue the Fed’s emergency accommodative monetary policy — long after the economic emergency had passed — Chairman Powell’s recent comments give me confidence that he recognizes the risks of higher and more persistent inflation and is willing to act accordingly to control it,” Toomey said in a statement.
Biden’s decision comes as the Consumer Price Index topped 6 percent last month, the highest yearly increase since 1990. Managing inflation is key to Biden’s economic agenda as Democrats try to push through a $2 trillion economic and climate policy package, amid fears from members of their own party that more government spending will spike already rising prices.
Biden’s decision to nominate Powell for a second term will rankle some progressives.
Sen. Elizabeth Warren, D-Mass., at a Banking hearing in September, told Powell his track record of easing regulations on Wall Street made him a “dangerous man” to lead the Fed.
“During his tenure, Chair Powell first ignored climate change and then resisted calls for the Fed to use its tools to fight it,” they said. “Climate is not a long-term challenge for the Fed; it demands action now.”
Their objections are unlikely to endanger Powell’s confirmation, given his support among moderate Democrats and Republicans.
Powell was nominated by President Donald Trump for the Fed’s top job in 2018. He first joined the board as a member after President Barack Obama nominated him in 2012. The chairmanship is a four-year position.
This report was updated to accurately reflect the current holder of the vice chair position at the Federal Reserve.