White House Economic Advisory Team Reviews Advice on Powell's Reappointment and Brainard's Nomination as Fed Vice Chair

Jerome Powell, Chairman of the U.S. Federal Reserve (Fed) [Photo by Reuters]

[Asia Economy Reporter Park Byung-hee] Bloomberg News reported on the 26th (local time), citing sources, that the White House economic advisory team is considering advising President Biden to consider reappointing Jerome Powell, Chair of the Federal Reserve (Fed).

The source also added that the economic advisory team is reviewing the possibility of nominating current Fed Governor Lael Brainard as Fed Vice Chair to oversee bank regulation.

Furthermore, the source stated that President Biden is not yet placing significant emphasis on Fed appointments and is unlikely to make decisions regarding Fed personnel until this fall.

Powell’s term, appointed during former President Donald Trump’s administration, expires in February next year. It is customary for Fed Chairs to be reappointed. However, former President Trump broke this tradition by replacing former Fed Chair Janet Yellen, who was appointed by the Democratic administration, with Powell. Because of this, whether Powell can succeed in being reappointed under the Democratic administration has recently become a major point of interest on Wall Street.

Powell is known to have broad support within the White House and the Treasury Department. President Joe Biden recently stated that the White House economic team agrees with Powell’s view that the inflation in the U.S. is temporary. Treasury Secretary Janet Yellen is also reported to have recently conveyed her support for Powell’s reappointment to the White House.

Following Treasury Secretary Yellen, the White House economic advisory team’s support for Powell’s reappointment appears to have increased the likelihood of his reappointment.

However, Bloomberg reminded that in November last year, President Biden surprised many members of the transition team by nominating Janet Yellen, rather than Lael Brainard, who was then considered a leading candidate, as Treasury Secretary.

The White House economic advisory team’s advice to nominate Brainard as Vice Chair to oversee bank regulation is interpreted as a strategic move to appease some Democratic figures opposing Powell’s reappointment.

Senators Elizabeth Warren and Sherrod Brown, members of the Senate Banking Committee from the Democratic Party, oppose Powell’s reappointment, citing that bank regulations are too lax. Warren and Brown are reportedly more favorable toward Brainard as Chair.

Before Powell’s term expires, the terms of the two current Fed Vice Chairs will end first. Vice Chair Randal Quarles’ term expires in October this year, and Vice Chair Richard Clarida’s term ends in January next year.

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