Biden rejects ‘fresh blood’ for Fed, says Powell brings stability the central bank needs

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President Joe Biden said on Monday that his nomination of Jerome Powell to head the Federal Reserve will bring stability to the country’s central bank as the US continues to recover from the pandemic, rejecting calls that the institution needs “fresh blood”. Is.

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The White House announced early Monday that Biden would re-nominate Powell – who was first chosen by former President Donald Trump – to run the Fed and tap Lyle Brainard for the bank’s No. . With the exception of a few progressive lawmakers such as Massachusetts Democrat Sen. Elizabeth Warren, Powell’s choice is being seen as a nod to victory on Capitol Hill.

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Now As suspense builds, Biden taps Powell for second term

“We expect the pair to receive prompt Senate confirmation, and we view this decision as a market positive, especially for banks XLF,
-0.39%,
Ed Mills of Raymond James said in a note.

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In an apparent reply to critics like Warren, Biden said “we need stability and independence at the Fed,” and added that fighting climate change will be one of Powell’s top priorities.

Speaking after Biden, Powell said he and his allies would use their tools “to support the economy and a strong labor market, and to prevent high inflation from freezing.”

Brainard also addressed inflation, saying it would put working Americans at the center of their jobs and promised a “sustainable recovery.”

The announcements come as Biden’s approval rating is taking a blow from inflation, and the president’s decisions are poised to have far-reaching consequences for him as well as the economy.

View: Powell and Biden are rolling the dice on inflation and growth

“Powell’s nomination is an endorsement by President Biden of the Fed’s pandemic response and pandemic containment plan,” John Lieber of the Eurasia Group said in a note. “It means that Biden is now politically the master of Powell Fed’s policies and its consequences,” Lieber said.

With the midterm election approaching next year, Republicans are attempting to use inflation as a cuddle over Biden. Florida Sen. Rick Scott, who heads the GOP’s Senate-campaign branch, recently told The Wall Street Journal that sustained inflation is a “Gold mine” for his party.

Warren said in a statement that she would vote against Powell and support Brainard – and also urged Biden to move swiftly on another important Fed appointment.

“Powell’s failures on regulation, climate and ethics make the still vacant position of vice president of supervision critically important,” she said. “This position needs to be filled by a strong regulator with a proven record of tough and effective enforcement – ​​and it needs to be done quickly.”

Powell, a Republican, also Warren’s fellow Democratic Sen. Sheldon Whitehouse of Rhode Island and Jeff Merkle of Oregon have come in for criticism.

“President Biden should appoint a Fed chairman who will ensure that the Fed is fulfilling its mandate to protect our financial system and shares the administration’s view that fighting climate change is the responsibility of every policy maker. That person is not Jerome Powell,” both senators said in a statement on November 19.

Biden called Powell’s leadership “stable and decisive” in stabilizing markets and helping the economy recover from the COVID-19 pandemic. The president’s nomination is expected to receive support from Republicans as well as Democrats, said Senate Minority Leader Mitch McConnell, a Kentucky Republican, ready to support Powell,

Too Biden could reshape the Fed by filling three open seats. Here are the top 5 contenders

US Stock DJIA,
-0.30%
Were up sharply on Monday as Wall Street digested news of Biden’s Fed picks.

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