Jerome Powell, current Fed chair, has been nominated by Joe Biden for a second term. During this new term, Powell, will have four more years to keep unemployment and inflation under control. Powell was elected during the Donald Trump’s administration, but Biden, has preferred to keep him in the position, after his handling of the Federal Reserve during the pandemic, rather than opting for a more progressive selection, such as Fed Board of Governors member Lael Brainard,
Jerome Powell is one of these policymakers who is appealing to both parties. He was first nominated by Obama in 2014 to become a Fed Board member, and four years later he become Fed Chairman, under the Trump’s administration, and now he will have his second term as a chairman under another Democrat president, Joe Biden.
Powell has been praised by the way he has handled the pandemic, and his application of a fiscal policy that would become a relief to particular populations and groups, as per his own words “We do think fiscal response are critical”.
We have received the first commentaries from the asset managers about his re-election. We had the commentaries from Mediolanum International Funds, and Richard Bernstein Advisors. Powell’s re-election will be effective in February 2022.
Charles Diebel, Head of Fixed Income, Mediolanum International Funds Ltd
The renomination of Jerome Powell to FOMC chair for a second term is in line with market consensus ahead of time although the now Vice-chair Lael Brainard was a close contender for the role. The removal of uncertainty in terms of the leadership to an extent clears the way for policy action to take on a more dynamic shape. By this we are likely to see an acceleration of the tapering process of asset purchases and likewise bring forward the potential for rate hikes to the middle of 2022 as the pace of the recovery remains robust whilst at the same time inflation pressures are remaining more persistent than many believed was likely.
Dan Suzuki, Deputy Chief Investment Officer at Richard Bernstein Advisors
It seems in line with what the tea leaves were indicating. The democrats gave up the option of a future inflation scapegoat in favor of a well-respected known entity that was supported by Yellen. While on paper, Powell leans slightly more hawkish than Brainard, their policies are very similar and Powell provides more consistency and less uncertainty. Biden still has more appointments that will shape the overall make-up of the Fed.