US President Joe Biden keeps Jerome Powell at the helm of the Fed for a second term

US President Joe Biden chose Jerome Powell for a second four-year term as chairman of the US Federal Reserve and elevated Governor Lael Brainard to vice chairman, maintaining consistency at the central bank as she is grappling with the fastest inflation in three decades as well as the lingering effects of the coronavirus pandemic.

The move, announced Monday by the White House, rewards Powell for helping save the U.S. economy from the pandemic and tasks him with protecting that recovery from a spike in consumer prices. A Republican, Powell faces what will likely be a soft confirmation in the Senate, where he was backed for his first term as president in an 84-13 vote and whose members he then worked hard to woo.

Brainard would replace Richard Clarida as vice president and could face opposition from Senate Republicans for his confirmation.

She was interviewed by Biden for the position of president and was seen as a strong candidate for the separate vice president position for oversight, which remains vacant. “Clearly the market is looking at the likelihood of the Fed raising the rate cut and accelerating the timing of the first rate hike now that Powell” is renamed Kathy Jones, chief fixed income strategist at Charles Schwab & Co said on Bloomberg Television after the news broke. Investors expect the Fed to raise rates from near zero in June, according to prices in interest rate futures markets. US stocks opened higher and Treasuries extended losses after the Fed news. Biden plans to announce that nomination along with additional choices for open seats on the Board of Governors beginning in early December, the White House said.

Senate Banking Committee Chairman Sherrod Brown, a Democrat from Ohio, and top Republican Patrick Toomey of Pennsylvania, both indicated they would support Powell’s renomination. Powell, 68, has enjoyed bipartisan support, including from Treasury Secretary Janet Yellen and other Democrats, though progressive Democrats such as Massachusetts Sen. Elizabeth Warren have pressured Biden to choose someone more aligned with them on banking supervision and the fight against climate change. Powell also had to answer for an ethics scandal after trade revelations from some senior Fed officials.

Powell’s pick will also likely win investor approval by providing continuity to the central bank as it begins to withdraw its ultra-easy monetary policy amid the challenges of persistent inflation. Biden, in a written statement, called the economic recovery so far “a testament to the economic program I have pursued and the decisive action the Federal Reserve has taken under the leadership of Chairman Powell and Dr. Brainard to help us get through the worst downturn.” in modern American history and set us on the road to recovery.

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