There will be no change of the head of the most important central bank in the world. By the decision of Joe Biden, chairman Jerome Powell, nominated by Donald Trump, will retain his position.
The White House announcement of a decision on the chairman of the Federal Reserve in 2022-2026 has been speculated for several weeks. On the media exchange of names, the most serious opponent for Powell was Lael Brainard, an economist associated with the Democrat camp on the Fed board. By decision of the president, Brainard will become vice-president.
While there is still work to be done, we have made tremendous progress over the last 10 months in getting Americans back to work and getting our economy back on track. This success is the result of my economic agenda and the courageous efforts of the Federal Reserve, led by Chairman Powell and with Dr. Brainard, to help us navigate through the worst economic downturn in recent US history, Joe Biden said in a statement.
Jerome Powell took over the Federal Reserve on February 5, 2018, when he replaced Janet Yellen, Joe Biden’s current treasury secretary. Under US law, a chairman’s term of office is 4 years, but there is no upper term of office – for example, Alan Greenspan ran the Fed for 18 years (1987-2006). The next term of office will run from February 2022 to February 2026.
In addition to being a chairman, Powell is still a member of the board of the US central bank – his term in this role began in 2011 under the presidency of Barack Obama and will not expire until January 2028. Lael Brainard’s term will end in 2026.
“I am confident President Powell and Dr. Brainard will focus on keeping inflation low, prices stable and full employment, which will make our economy even stronger than before. Together, we believe that there is a need to take immediate action to address the economic risks associated with climate change and to look at the risks arising in the financial system. Above all, if we are to continue to build our economic success, we need the stability and independence of the Federal Reserve – I am confident that after the “trial of fire” of the past 20 months, President Powlell and Dr. Brainard will provide the strong leadership the country needs, added the US President.
In reaction to the appointment of the new-old Fed chairman, the dollar strengthened. EUR / USD went down from 1.128 to below 1.125. This is a result of market assessments that Lael Brainard would be a more dovish chairman than Powell – which would mean that monetary tightening (which investors are counting on for next year) could be undertaken later and / or be milder. The strong dollar is also visible in the USD / PLN performance, which is currently trading at PLN 4.17.