September 15, 2021, | AtoZ Markets–Fed Chairman, Jerome Powell ends his term next year. There are many speculations about whether he will have the opportunity to lead the most important central bank in the world. In this article, we tell you what the experts say.
Powell was appointed Fed chairman by ex-US President Donald Trump, who subsequently launched strong criticism against him for his refusal to cut rates, at the height of the White House’s trade tension with China.
Powell had to ensure the Fed’s independence during Trump’s presidency, and in the final stretch of that term had to deal with the outbreak of the pandemic and its devastating economic impact. In the face of which he deployed an unprecedented battery of monetary stimulus.
Janet Yellen Endorses Re-Election to Powell’s Fed Command
Having Janet Yellen’s backing for Powell is practically decisive if he wants to win his re-election as head of the Fed. Not surprisingly, the current Secretary of the Treasury was his predecessor at the head of the United States central bank a few years ago.
In addition, Powell already had the opportunity to work with Yellen at the Fed since he was governor of the institution from 2012 until he was appointed president in 2018.
Powell Will Not Have an Easy Road
Lawmaker Alexandria Ocasio-Cortez and other representatives of the most progressive Democratic wing have urged US President Joe Biden to replace Jerome Powell at the head of the Federal Reserve (Fed).
“We urge President Biden to reimagine a Federal Reserve focused on eliminating climate change risk and advancing racial and economic justice,” said a statement from Ocasio-Cortez.
While the lawmakers acknowledged some “positive changes” by the Fed under Powell in its monetary approach in pursuit of full employment, they also criticized little progress in “mitigating the financial risk linked to climate change.”
Additionally, US Senator Christopher Dodd and former Congressman Barney Frank asked Biden to replace Powell.
Other Possible Candidates to Replace Powell
Some analysts have mentioned Lael Brainard, current Fed Governor, a strong rival of Powell. Also, another alternative would point to current Atlanta Fed President Raphael Bostic, the first African-American to head one of the Fed’s regional branches. An increasingly influential voice on economic equity issues.
Bostic was also assistant secretary of the Department of Housing and Urban Development when Biden served as U.S. vice president during the Obama era.
On the other hand, White House economic advisor Jared Bernstein has avoided making compromising comments. He has only mentioned that the Biden Administration still has a strong process to go through “before we start talking about this issue.”
Powell’s Election As Fed Chief Gains Momentum
In recent months, Biden’s team has been silent on the selection of the Fed chairman. However, it is said that the White House appears to support the reelection of Powell.
However, some experts say that the president will wait until Congress completes the pending tasks of fiscal policy. This includes the federal spending deadline, the debt ceiling, and the $ 3.5 trillion social spending package.
Meanwhile, Brian Gardner, Washington’s chief policy strategist for Stifel Financial Corp., said in a recent note that the most likely outcome is Biden renaming Powell for another term, and moving Lael Brainard to the role of a key person on regulatory issues.
For all traders, what happens to the Fed is always decisive for the future of their investments. Jerome Powell has been characterized by his moderation, calm, and tranquility in managing the Federal Reserve. The markets would be very concerned if whoever replaces him the next year does not have these qualities.