Next Fed Chair: Who Will Biden Choose Tomorrow, Powell or Brainard?

Powell Likely to Be Reappointed, but
Possibility of Brainard's Appointment Grows After Biden Interview

Jerome Powell, Fed Chair (right), and Lael Brainard, Fed Governor [Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Baek Jong-min] The decision on the next head of the Federal Reserve (Fed), the world's central bank, is just one day away. The world is closely watching who will lead the normalization of monetary policy not only in the United States but globally after the COVID-19 pandemic.

While Jerome Powell, the current Fed Chair, is expected to be reappointed, the selection of Lael Brainard, a Fed Governor, could cause significant market shock.

U.S. President Joe Biden has announced that he will reveal the next Fed Chair by the 19th (local time). With Powell's term expiring in February next year, President Biden has delayed the nomination of the next Chair.

There are two candidates: Chair Powell and Governor Brainard. According to U.S. media, both have already interviewed with President Biden. This is why it is widely assumed that one of the two will take the Fed Chair position unless there is an unexpected development.

Although Treasury Secretary Janet Yellen praised Powell's response to COVID-19, suggesting his reappointment is likely, reports that Brainard's interview lasted longer than Powell's have strengthened the possibility of Brainard's appointment.

Chair Powell is a Republican figure nominated by former President Donald Trump. Progressive Democrats have opposed Powell's reappointment, arguing that he relaxed financial regulations.

On the other hand, Governor Brainard is favored by progressives. The progressive camp believes that only with Brainard as Chair can the central bank effectively address climate change.

Considering the tradition that a Fed Chair typically serves one reappointment even after a change in administration, Powell's reappointment cannot be ruled out. President Biden's respect for tradition increases the likelihood of Powell's continuation.

Senate confirmation must also be considered. Since Powell is the incumbent and a Republican, his confirmation by the Senate is unlikely to face major obstacles. In contrast, Brainard's confirmation is less certain, which is a disadvantage. Given the impact on the U.S. economy if the head of monetary policy fails the confirmation process, this is a difficult choice.

Market reactions must also be taken into account, as a change in Fed Chair could influence the timing of interest rate hikes. CNBC predicted that unlike Powell's reappointment, Brainard's appointment could delay the timing of rate increases.

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