Biden, worried about high inflation, opts for stability with Powell remaining

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▲ Chairman Jerome Powell

U.S. President Joe Biden’s appointment of Jerome Powell as chairman of the Federal Reserve appears to be in response to the judgment that stability is more important than ever in the process of economic recovery from the pandemic.

Above all, it is believed that the concern that President Biden’s already declining approval rating could suffer even more if high inflation is not caught.

The prospect that Chairman Powell’s confirmation by the Senate will be easy is also considered one of the reasons for his tenure.

“We can’t just go back to where we were before the pandemic,” Biden said in a statement on the morning of the 22nd morning local time, where he resigned as Chairman Powell and nominated Fed Director Rayle Brainerd as vice-chairman. We need to rebuild it better,” he said.

“I am confident that Powell and Brainard will make our economy stronger than ever before, with a focus on keeping inflation low, stabilizing prices and bringing maximum employment,” he said. emphasized.

While emphasizing the importance of price stability and maximum employment, it clearly demonstrated his will to promote continuity and stability of economic policies through the appointment of Chairman Powell.

In particular, for President Biden, who is struggling with declining approval ratings, price stability is the immediate challenge.

President Biden and Chairman Powell have defined high inflation as a temporary phenomenon caused by supply shortages, but recently, they have focused their efforts on price stability, fearing the possibility of a prolonged period.

The Wall Street Journal (WSJ) also pointed out that President Biden’s political fate may depend on Powell’s response.

Republican Chairman Powell was ratified four years ago with the support of 84 out of 100 senators when he was nominated by former President Donald Trump.

With 68 of the 84 still serving as senators and equally divided between the two parties, the general view is that the ratification process will not be a problem this time, the US media reported.

Retention of the Fed chairman position is common.

Former President Trump did not retain then Fed Chairman Janet Yellen and replaced it with Powell, but Ben Bernanke and Paul Volker remained, and Alan Greenspan served as Fed Chairman for 18 years.

The appointment of Director Brainerd, who had been considered a candidate for the Fed chair, to the vice-chairman is interpreted as taking into account criticism from some of the progressives that Chairman Powell is passive in responding to climate change and financial regulation.

Chairman Powell’s past four years have been a series of exceptional circumstances.

From 2018 to 2019, former President Trump did not hesitate to express his primary colors and openly demanded and pressured the interest rate cut.

The president’s continued public blows have led Senate Republicans to encourage Powell to “keep the Fed independent.”

Since March of last year, we have ushered in an era of zero interest rates in the face of the unprecedented situation of COVID-19.

Starting this month, asset purchases have been reduced and monetary policy has been normalized.

Reference-news.sbs.co.kr

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