Will Paweol, Criticized in Parliament... Will His Re-election Be Blocked?

Term Ends in February Next Year
Yellen: "Will Discuss Powell's Reappointment with Biden"
Both Parties in Senate with Confirmation Authority Express Dissatisfaction
Possibility of More 'Dovish' Chair Appointment if Progressive Camp's Influence is Reflected

Jerome Powell, Fed Chair [Photo by AP News]

[Asia Economy New York=Correspondent Baek Jong-min] Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), faced attacks from both Democrats and Republicans during his appearance before the U.S. Senate on the 15th (local time). There are prospects that a yellow light has been turned on for Powell's reappointment, whose term ends in February next year.

Janet Yellen, U.S. Treasury Secretary, who can influence the reappointment of the Fed Chairman, showed a cautious stance when asked about Powell's reappointment.

In an interview with CNBC on the same day, when asked whether she supports Powell's reappointment, Secretary Yellen avoided a direct answer, explaining that it is "a matter to discuss with the President." Without providing specific elaboration, she only mentioned that "the Fed has done a great job recently." Although the appointment authority for the Fed Chairman lies with President Joe Biden, the Treasury Secretary's opinion is also an important reference.

Especially since Secretary Yellen served as Fed Chair until just before Powell's appointment, her remarks and evaluations carry even more weight. Yellen emphasized the principle, seemingly mindful of the central bank's independence, saying, "I have great respect for the Fed. It is important that they make independent decisions."

In the Senate, which holds the authority to confirm the Fed Chair, complaints about Chairman Powell were rampant on the same day.

Left-wing Democratic senators strongly criticized the Fed's response to climate change and its allowance of Wall Street bank dividends. Republican Senator Pat Toomey criticized the Fed's insufficient response to inflation and demanded an early reduction in asset purchases. A major foreign media outlet evaluated that the Senate's support could be a variable in Powell's reappointment.

Whether Powell is reappointed is a matter that could bring significant changes to the Fed's monetary policy, attracting market attention. Professor Son Sung-won of Loyola Marymount University said, "President Biden's nomination of a successor to Chairman Powell will be another key test in gauging inflation expectations," adding, "Depending on who the next chair is, inflation expectations could rise further."

If the influence of the Democrats and the left-wing camp is reflected, a more dovish figure than Powell could be appointed. Since Powell's term ends in February next year, it is expected that President Biden will appoint a successor within this year.

Meanwhile, Chairman Powell and Secretary Yellen showed similar views on the U.S. economy and inflation on the same day.

Powell, appearing before the Senate, said, "The shocks related to the reopening of the economy have pushed the inflation rate well above 2%, and naturally, we are uncomfortable with this situation," but argued, "If inflation is temporary, responding to it would be inappropriate."

Janet Yellen, U.S. Secretary of the Treasury
Photo by Reuters

However, he said, "The challenge we face is how to respond to this inflation." While maintaining the claim that inflation is temporary, he indicated that he is closely monitoring the effects of inflation. He also mentioned that confidence in the U.S. economy has decreased compared to the beginning of the year.

Secretary Yellen, in an interview with CNBC, explained, "Rapid inflation will continue for a few more months," adding, "In the medium term, I believe inflation will decline and return to normal levels."

Yellen cited the recently declining U.S. Treasury yields as an example, saying, "Inflation expectations appear to be well controlled in the medium term," and "The market sees that inflation is under control."

Despite the continued rise in inflation, the U.S. 10-year Treasury yield fell by 0.055 percentage points to 1.301% on the same day. During the session, the yield dropped as low as 1.292%, threatening the 1.3% level.

This content was produced with the assistance of AI translation services.