Powell Remains. Brainard Enters
On Monday, November the 22nd, President Biden, with the endorsement of Treasury Secretary Janet Yellen, ended weeks of speculation by reappointing the Republican supporting Jerome Powell for a second term and the new appointment of Democrat Dr. Lael Brainard to the positions of Fed Chair and Vice-Chair.
Both enjoy bipartisan support in the Senate and are seen as monetary policy doves by market participants, which suggests the Fed will resist interest rate hikes for as long as possible in 2022, even with inflation no longer remaining transitory but looking more entrenched.
In the news, major stock indices advanced, with Apple [AAPL] and Microsoft [MSFT] recording record highs at $165.70 and $349.68 respectively. The entire Tech sector sought solace by reflecting on how benign the 'dovish' policies of the Fed Chairman have been to the technology sector since his original appointment under Trump in 2018.
As Trump's Presidency slowly unraveled, he appeared to regret his choice of appointing former investment banker Jay Powell to the Fed Chair [arguably the most influential financial post in the world] by often publicly complaining that he was nudging interest rates higher and not doing enough to support the economy with monetary stimulus.
Nonetheless, the USA Central Bank moved swiftly in early 2020 as the ramifications of Covid 19 on the global economy became apparent by rapidly cutting interest rates to near zero and resuming bond purchases to the tune of $4 trillion.
Fed leadership from the Eccles Building in Washington brings onerous responsibilities including overseeing an over $8 trillion balance sheet and an obligation to regulate the world's largest and most important banks, as well as providing financial assistance to other central banks around the World if it's necessitated due to a systemic threat or disorder.
From opposing political factions, Powell and Brainard have sharply divergent views on financial regulation and climate change. Powell favors lessening regulations on market participants and going easy on the fossil fuel industry.
Nevertheless, on employment and inflation, they speak with one voice favoring higher inflation to achieve a strong jobs market and full employment.
President Biden concluded his statement from the White House " If we want to continue to build on the economic success of this year, we need stability and independence at the Federal Reserve - and I have full confidence after their trial by fire over the past 20 months that Chair Powell and Dr. Brainard will provide the strong leadership our country needs".