The renomination of Federal Reserve Chairman Jerome Powell for a second term is about “continuity [and] independence,” Jared Bernstein, a key advisor to President Joe Biden, told Yahoo Finance on Monday.
When the president thought about “a Federal Reserve that would implement the kind of economic policy [people] associate with Joe Biden — providing opportunities for lower- and middle-income people and making sure Wall Street is amply regulated — he decided Jerome Powell was the right man for the job," Bernstein said.
The financial world has been on edge for weeks wondering whether Biden would replace Powell with Fed Governor Lael Brainard, a progressive favorite. In the end, Brainard didn't get the top job but did receive a promotion with a nomination to serve as Vice Chair of the Board of Governors of the Federal Reserve.
Response from Capitol Hill included key Democrats like Sen. Sherrod Brown of Ohio, who signaled support for the renomination of Powell, a Republican who was elevated to the chair by then-President Trump.
Sen. Pat Toomey (R., Pa.) threw his support behind Powell and expressed "concerns" over Brainard's record. In a statement Sen. Elizabeth Warren (D., Mass.) reiterated her opposition to Powell, who she has called a “dangerous man.” She said she would oppose Powell while offering her support for Brainard.
My statement on the Federal Reserve nominations: pic.twitter.com/W8FgAJdj2e
— Elizabeth Warren (@SenWarren) November 22, 2021
Bernstein said Brainard has been doing important work on regulatory issues and, in her new role, “she could continue to have probably an even broader input in those areas.”
Bernstein currently sits as a member of the White House Council of Economic Advisers and has had a long relationship with Biden on economic issues. From 2009 to 2011, Bernstein served as the chief economic advisor to then-Vice President Biden during the Obama administration.
Just hours after the news broke on Monday Bernstein emphasized the similarities between the two possible Fed leaders. Both Powell and Brainard “have been careful not to try to kind of over-intervene” on inflation, he said, arguing that inflation has largely stemmed from supply chain issues that are closely related to the pandemic and will gradually resolve.
“I think they've been quite clear and consistent in their story,” said Bernstein.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.