Biden meets with Fed leaders Powell and Brainard as nomination decision nears

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  • President Joe Biden met with Federal Reserve Chairman Jerome Powell and Governor Lyle Brainard this week.
  • The Democrat-controlled Senate would confirm either as Fed head, although Republican Powell would face resistance from progressives and Democrat Brainard would face opposition from the GOP.
  • Brainard is widely considered the top candidate for the Open Vice Chair for the Supervision position if he is not tapped for the chair.

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President Joe Biden met with Federal Reserve Chairman Jerome Powell and Governor Lyle Brainard this week, according to a person familiar with the matter, as the administration decides who to head the central bank for the next four years. be nominated.

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Powell and Brainard, met separately from Joe Biden, are seen as the two most likely candidates to head the world’s most powerful central bank, which sets interest rates, works to control inflation. and oversees the largest banks in the country.

The person told CNBC that the president has not made a final decision on who will lead the Fed. Washington and Wall Street expect an alternative in the coming days.

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The Democrat-controlled Senate will likely confirm any candidate as Fed chief. Republican Powell may face resistance from progressives, and Democrat Brainard will face opposition from the GOP.

At least a handful of moderate Democrats, and nearly every Senate Republican, would be expected to endorse Powell as an endorsement of his steady hand at the Fed.

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The central bank flooded the US economy with cash in the spring of 2020 to combat unemployment and recession from the COVID-19 outbreak on US Wall Street, to stabilize financial markets and keep interest rates low. Big-ticket monetary policy is credited. .

Brainard is widely considered the top candidate for the Open Vice Chair for the Supervision position if he is not tapped as the chair. In that role, Brainard would become one of the country’s top banking regulators and a principal deputy to the chairman.

Some progressive Democrats support his candidacy, arguing that Powell has not pushed the Fed enough on issues such as the economic impacts of climate change or income inequality.

Elizabeth Warren of Massachusetts, a progressive, said in September that leaving Powell the chair would be a mistake. He said the Fed’s recent rollback of banking rules has made the central bank chief a “dangerous man”.

Earlier this week, the Fed announced it would begin reducing its regular asset purchases used to help stimulate the economy during the pandemic.

The central bank has been buying $120 billion in Treasury bonds and mortgage-backed securities since the spring of 2020 to ensure markets have easy access to liquidity and to suppress interest rates.

It has not said when it will start raising interest rates, and does not expect to do so for at least several months.

CNBC’s Kayla Taush contributed reporting.

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