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Fed-Watchers Emphasize Policy Continuity in Biden’s Picks

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Economy57 minutes ago (Nov 22, 2021 15:40)

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© Bloomberg. Jerome Powell and Lael Brainard during a Fed Listens event in 2019. Photographer: Zach Gibson/Bloomberg

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(Bloomberg) — President Joe Biden selected Jerome Powell for a second term as Federal Reserve chair, and elevated Governor Lael Brainard to become vice chair of the U.S. central bank.

Biden plans to announce his nominations for vice chair of supervision along with additional picks for open seats on the Board of Governors beginning in early December, the White House said Monday. 

Fed-watchers emphasized the continuity in monetary policy that the choices signify. Here’s what they had to say:

Neil Dutta, head of U.S. economics at Renaissance Macro in New York

“Jerome Powell has long been the most obvious choice given the political dynamics in the U.S. Senate. The space between Powell and Brainard on matters on monetary policy is not as large as has been made out to be.”

“I do not expect Powell to turn hawkish now that this announcement is out of the way. I think he is someone who means what he says when he says it. If there is a change in policy, it will be because the economic data has strengthened in such a way that it demands a policy change.”

Michael Pugliese, economist at Wells Fargo (NYSE:WFC) Securities in New York

“Keeping Chair Powell in his position certainly is a continuity point. And then, elevating Brainard to vice chair certainly elevates her role a little bit. But it’s not just Powell, it’s not just Powell and Brainard — we’ll certainly see what happens with these other nominations as well.”

“At a high level, this is not a big game-changer in terms of monetary policy.”

“I think the important thing to remember is obviously chair Powell is already the chair, and governor Brainard goes to vice chair. In terms of fed inflection points, those are pretty steady.”

Diane Swonk, chief economist at Grant Thornton LLP in Chicago

“This provides a moment of certainty in a persistently uncertain world for the Federal Reserve.”

“Powell and Brainard are a powerful duo, who have shifted the Fed to focus more on inequality. Inflation foments inequality — they get that. The heavy lifting is how to deal with inflation without also disproportionately hurting those who can afford it least.”

“There is a need to staff full Fed. Too many seats are or will be vacant and we need all hands on deck.”

©2021 Bloomberg L.P.

Fed-Watchers Emphasize Policy Continuity in Biden’s Picks

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