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President Biden has nominated Jerome Powell to remain Fed chair


Well, it looks like Jerome Powell will stay on in one of the world's most powerful economic jobs. President Biden said today that he plans to renominate Powell for a second term as chairman of the Federal Reserve. Biden praised Powell, who goes by Jay, for steering the central bank through the deepest recession in nearly a century.


PRESIDENT JOE BIDEN: When our country was hemorrhaging jobs last year and there was panic in our financial markets, Jay's steady and decisive leadership helped to stabilize markets and put our economy on track to a robust recovery.

CHANG: All right. NPR's Scott Horsley joins us now with more. Hey, Scott.

SCOTT HORSLEY, BYLINE: Good to be with you, Ailsa.

CHANG: Good to have you. All right. This nomination is coming at a pretty sensitive time for the U.S. economy, right? Like, the Fed is nursing an uneven recovery while also facing the highest inflation rate in more than three decades. How do you think Powell is going to try to navigate that?

HORSLEY: Very carefully.

CHANG: (Laughter).

HORSLEY: When the pandemic first hit, Powell and the Fed moved really aggressively to cushion the economic fallout. They immediately cut interest rates to near zero, pumped trillions of dollars into the economy. Those moves were generally popular, and as bad as the downturn was, we have seen a relatively rapid recovery. But along with that strong rebound, there's also been a spike in prices. So now comes the tricky part. Powell and his colleagues have to figure out how quickly to take their foot off the gas and how strongly to start tapping the brakes. In speaking to reporters this afternoon, Powell acknowledged the hardship that rising prices are causing for a lot of people.


JEROME POWELL: We know that high inflation takes a toll on families, especially those less able to meet the higher costs of essentials like food, housing and transportation. We use our tools both to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.

HORSLEY: Inflation in October was just over 6%. That's about three times the Fed's long-term target. Now, Powell has said the Fed doesn't want to overreact and slow the economy down when we still have millions of people out of work, but if inflation stays high like this, we could see the Fed start to raise interest rates sometime next year.

CHANG: OK, well, what's been the reaction to President Biden's decision to renominate Powell?

HORSLEY: There have been encouraging comments from lawmakers on both sides of the aisle. The markets pretty much took this in stride. This was the outcome Wall Street was expecting. Some progressive Democrats did want a different candidate, Fed Governor Lael Brainard. She's been somewhat more aggressive than Powell on bank regulation, and she also favors a somewhat more expansive role for the Fed in battling climate change. What's more, she's a Democrat. Powell's a Republican. Biden did tap Brainard for the vice chair's position at the central bank, but he says he wants the Fed to be both stable and politically independent.


BIDEN: I believe we need to do everything we can to take the bitter partisanship of today's politics out of something as important as the independence and credibility of the Federal Reserve.

HORSLEY: Leaving a Republican in charge of the Fed also gives Biden a little bit of political cover if inflation stays high. It kind of reminds me that old "Simpsons" episode where it's back-to-school night and the sign outside Springfield Elementary says, let's share the blame.

CHANG: (Laughter) Well, now, I understand that the president still has several other vacancies to fill at the central bank. Can you talk about what those positions are?

HORSLEY: Yeah. There are going to be three vacancies on the seven-member Fed board for Biden to fill, and he's expected to announce additional nominees in the coming weeks.


BIDEN: While Jay and Lael bring continuity and stability to the Fed, my additions will bring new perspectives and new voices. I also pledge that my additions will bring new diversity to the Fed, which is much-needed and long overdue, in my view.

HORSLEY: The Fed has long been mostly male and overwhelmingly white, so this is a chance for Biden to put his stamp on that.

CHANG: That is NPR's Scott Horsley. Thanks as always, Scott.

HORSLEY: You're welcome.


Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.