• By The Financial District

Biden Keeping Powell As Fed Chairman Likely, Says Reuters

With the US Federal Reserve in the midst of a complicated policy shift, central bank watchers see a re-nomination of Jerome Powell to a second 4-year term as Fed chief as increasingly likely, a view bolstered by Powell's standing within the Biden administration and a closely divided Senate, Howard Schneider, Ann Saphir, and Trevor Hunnicutt reported for Reuters.

The Fed chair's current term expires in February, and advisers to President Joe Biden say he has not yet decided whether to reappoint Powell, a private equity lawyer named to the Fed's Board of Governors by Barack Obama and promoted to the top job by Donald Trump.

But a range of factors appear to tilt in his favor, with many Democratic economists supporting Powell's shift to a more jobs-focused monetary policy during a turbulent period for the labor market.

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On Powell's broader economic record, two senior Biden administration officials told Reuters they are pleased with his handling of the pandemic recovery, acknowledgment of the economic support provided by Biden's fiscal program, and management of an increasingly challenging inflation scene.

Moreover, with roughly half a year remaining in Powell's term, little evidence has emerged suggesting Biden plans a switch - and face the market risk of doing so - at a sensitive moment for the economy.

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Also notable is that prior Fed leadership handovers have come amid relative certainty over the policy outlook, not on the cusp of potentially disruptive decisions such as when to phase out crisis-era bond purchases or how to confront a potentially lasting jump in inflation.

“Having uncertainty about who the next chair will be directly translates into policy uncertainty, which in turn results in market uncertainty," said Cornerstone Macro analyst Roberto Perli. Powell's colleagues "may be less inclined to take cues from a chair that may or may not be there in a few months."


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