Just last week President Biden renominated current Federal Reserve Chair, Jerome Powell for another four-year term to head the Fed. Lael Brainard, Federal Reserve board member and Governor, who took office of Governors of the Federal Reserve System on June 16th, 2014, was nominated as the Vice Fed Chair. Lael was in the running for the head spot, but President Biden decided to stick with Powell.
“While there’s still more to be done, we’ve made remarkable progress over the last 10 months in getting Americans back to work and getting our economy moving again. That success is a testament to the economic agenda I’ve pursued and to the decisive action that the Federal Reserve has taken under Chair Powell and Dr. Brainard to help steer us through the worst downturn in modern American history and put us on the path to recovery,” President Joe Biden said in a prepared statement.
Lael is seen as more of a “dove” than Powell, meaning she has a more accommodative outlook on policy. If she was nominated instead of Powell, the Bond market would have likely reacted even worse, which causes mortgage rates to worsen even more than it did because of the fear of her dovish outlook which would be supportive of accelerated or worsening inflation.
The U.S. and other economies will be watching the updated duo closely to see how they will plan and act on these increasing inflationary numbers. The most recent Consumer Price Index rose to 6.2% which was a new record high and much hotter than the 5.4% that was estimated. Even Core CPI increased by 4.6% which strips out food and energy prices.
It is important to stay very in tune with the Fed because they control monetary policy, regulations, moderation of interest rates in the economy and more which impact each and every person in the U.S. each and every day.
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By: Jon Iacono