US Republican Senator Sends Letter to President Biden Urging Reappointment of Fed Chair Powell

Republican Senator Steve Daines
Photo by AFP Yonhap News

[Asia Economy Reporter Park Byung-hee] A Republican senator in the U.S. opposition party sent a letter to President Joe Biden urging the reappointment of Jerome Powell as Chair of the Federal Reserve (Fed).

According to major foreign media on the 19th (local time), Senator Steve Daines of the Republican Party argued in a letter to President Biden that Powell should be reappointed for another four years to build confidence in the economic recovery. Daines, a senator from Montana, pointed out that replacing the head of the central bank during a sensitive period could cause uncertainty in the financial system and negatively impact the economic recovery trend.

Chairman Powell operated bold monetary policies last year in response to COVID-19. He lowered the benchmark interest rate to near zero and introduced a large-scale asset purchase program of $120 billion per month. Thanks to the Fed's aggressive stimulus measures, the U.S. economy is widely regarded to have quickly overcome the recession caused by COVID-19 and rebounded.

Daines emphasized that since such an unusually bold monetary policy was implemented, policy continuity is important, and therefore Powell's reappointment is necessary.

Daines is the first member of the Senate Banking Committee to officially express support for Powell's reappointment.

All Fed appointments must first pass a vote in the Senate Banking Committee before the full Senate confirmation vote.

In the Senate, including two independent senators leaning Democratic, the Democrats and Republicans are evenly split 50-50. However, the Senate Banking Committee has a Democratic majority. Senator Elizabeth Warren, a Democrat on the Banking Committee, is dissatisfied with Powell due to what she sees as overly lax Wall Street bank regulations. Senate Banking Committee Chair Sherrod Brown is also dissatisfied with the lax regulations. Brown is also a Democrat. He has expressed a desire to increase diversity, noting that all current Fed Board members are white.

Jerome Powell, Fed Chair [Photo by Reuters Yonhap News]

The White House has not yet commented on Senator Daines' letter. President Biden is also reportedly undecided on whether to reappoint Powell. However, last week, Biden said he trusts Powell's view that recent inflation is temporary and that the Fed will take necessary actions if needed.

Powell's term expires in February next year. He was appointed during President Donald Trump's administration.

It is customary for Fed Chairs to be reappointed. However, former President Trump broke this tradition by not reappointing Janet Yellen, who was appointed by the Democratic administration, and instead replaced her with Powell. Yellen became the first Fed Chair in 40 years since William Miller in the late 1970s to serve a single term. Powell was appointed to the Fed during a Democratic administration; he was appointed as a Fed Board member in 2012 under President Barack Obama's administration.

The Fed Board consists of seven members: one Chair, two Vice Chairs, and four Board members, with one Board seat currently vacant. Before Powell, Vice Chairs Randal Quarles and Richard Clarida's terms expire in October this year and January next year, respectively.

The environmental group 350.org argues that President Biden should replace Powell and form Fed leadership that addresses climate change. 350.org advocates nominating current Fed Board member Lael Brainard as Chair and appointing Michigan State University professor Lisa Cook and former Fed Board member Sarah Bloom Raskin to the two soon-to-be-vacant Vice Chair positions. 350.org also announced plans to hold protests at the upcoming Jackson Hole meeting, calling for Powell's replacement.

Not all progressive groups or figures oppose Powell's reappointment. Mike Konczal, a director at the left-leaning Roosevelt Institute, stated last week that he trusts Powell's Fed, which places more emphasis on full employment.

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