(WASHINGTON) — President Joe Biden announced Monday he will nominate Federal Reserve Chairman Jerome Powell to a second four-year term amid new concerns about controlling inflation.
He also said he would nominate Dr. Lael Brainard, a longtime Federal Reserve official and former Treasury Department undersecretary, to serve as vice chair of the Board of Governors of the Federal Reserve System.
“While there’s still more to be done, we’ve made remarkable progress over the last 10 months in getting Americans back to work and getting our economy moving again. That success is a testament to the economic agenda I’ve pursued and to the decisive action that the Federal Reserve has taken under Chair Powell and Dr. Brainard to help steer us through the worst downturn in modern American history and put us on the path to recovery,” Biden said in a statement.
The announcement follows recent questions surrounding whether Biden would renominate Powell, a Republican, who was nominated to chair the Federal Reserve in 2017 by then-President Donald Trump. Powell was first nominated to the Federal Reserve Board of Governors by then-President Barack Obama in 2011 before Trump elevated him to succeed Janet Yellen, who now serves as Biden’s treasury secretary.
“Fundamentally, if we want to continue to build on the economic success of this year we need stability and independence at the Federal Reserve — and I have full confidence after their trial by fire over the last 20 months that Chair Powell and Dr. Brainard will provide the strong leadership our country needs,” he added.
Biden is expected to speak about the announcement Monday afternoon with Powell and Brainard joining him for the appearance, according to the White House.
As the president faced mounting political pressure in recent weeks to shake up the leadership by nominating Brainard to replace Powell, he talked with both Powell and Brainard about his decision on Friday, according to a source familiar with the matter.
The president regularly engaged with members and stakeholders around the decision, including with both progressives and moderate Democrats on Capitol Hill, the source said. Biden recently met with Sen. Elizabeth Warren, D-Mass., at the White House to get her input on the decision after Warren had publicly called Powell a “dangerous man” to lead the agency.
“Your record gives me grave concerns. Over and over, you have acted to make our banking system less safe, and that makes you a dangerous man to head up the Fed, and it’s why I will oppose your renomination,” Warren said in a hearing on Sept. 28.
Biden and his team had also been in regular and close consultation with Sen. Sherrod Brown, D-Ohio, who chairs the Senate Banking Committee, according to the source.
Despite Brainard winning over progressives like Warren who argue she is tougher on bank regulation and climate change, by keeping Powell in place, Biden appears to be sending a message reaffirming the central bank’s independence from politics.
“Overall, with Mr. Powell remaining Chair, communication will remain clear and transparent and policy will not veer too far off from the current dovish path,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, an economic research consultancy firm, said in a statement to ABC News.
The nomination comes at a critical moment for the central bank, which has a mandate to contain inflation and sustain job growth. Powell has tilted “dovish” on inflation in recent months, insisting the run-up in prices will abate as the pandemic recedes and the supply chain untangles.
Powell oversaw a busy time at the Federal Reserve as it pumped unprecedented stimulus into the financial system in response to the pandemic and now starts to unwind some of that stimulus. Wall Street had been betting on his re-nomination as a way to keep continuity in policy at a tumultuous time in the economy.
If both are confirmed by the Senate, the White House will still have several seats to fill on the Federal Reserve Board, including the lead banking supervisor, allowing Biden the opportunity to reshape the central bank in a more drastic way with those picks.
Economists told ABC News they expect swift confirmation in the Senate for the nominees.
“We believe that Biden paired the announcement of the more Democratic-leaning nominee Lael Brainard with the Republican-leaning Jerome Powell to allay objections from the progressive members of the Democratic party,” said Kathy Bostjancic, Oxford Economics Chief U.S. Financial Economist.
Although at least three Democrats have signaled their opposition to Powell’s nomination, at least four Republicans have voiced support — so it appears he will be confirmed but not without multiple Republicans supporting Biden’s nominee. There were nine Democrats who opposed Powell’s nomination in 2018 when he was confirmed by the Senate in an 84-13 vote.
ABC News’ Allison Pecorin contributed to this report.
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