Home LAST NEWS Joe Biden renews Republican Jerome Powell as Fed head

Joe Biden renews Republican Jerome Powell as Fed head


He was appointed by Donald Trump who then vilified him. Jerome Powell, who has received approval from Joe Biden to remain at the head of the powerful US central bank for four more years, has remained stoic despite criticism and rose to the challenge of one of the worst recessions in history the United States. The Democratic President has decided to renew the mandate of the President of the Federal Reserve (Fed) despite pressure from the left wing of the Democratic Party, which preferred a candidate closer to his ideas. This candidacy has yet to be confirmed by the senators.

Aged 68, the former investment banker, a moderate Republican who is not an economist by training, has notably benefited from the support of Janet Yellen, his predecessor and current US Secretary of the Treasury with whom he shares the desire to guarantee more equitable growth and reduce inequalities affecting black and Hispanic minorities. When he arrived in 2018, “Jay” Powell, a former senior treasurer under the presidency of George HW Bush and appointed governor of the Fed in 2012 by Democratic President Barack Obama, is dealing with a rather healthy American and global economy. .

Limit the damage of Covid-19

Inflation is silent, the Fed under the leadership of the 16th president then begins to reduce aid to the American economy which had prevailed since the financial crisis of 2008. The monetary committee approved four interest rate hikes in 2018. attracting the wrath of Donald Trump. The Republican president then trampled on the tradition of respecting the independence of the central bank, almost daily targeting the Fed and its president via scathing tweets. Donald Trump will go so far as to publicly thunder that he regrets having appointed Jay Powell, who himself remains unmoved. The boss of the Fed refrains from any comment on the subject during his very rare appearances in the media as during the press conferences which he generalized after each meeting of the Monetary Committee.

In 2019, as the trade war with China rages on, the economy slows, the Fed backs off and starts lowering interest rates again. Until they drop to almost zero when in the spring of 2020, the Covid-19 pandemic spreads like wildfire in the United States and around the world. Jerome Powell understands that there is not a minute to lose. The recession recorded in 2020 will prove to be the worst since World War II. But the Fed and its chairman have managed to limit the damage and reassure the financial markets. The Fed quickly set up new loan facilities and a massive bond purchase program to ensure the fluidity of the American financial system.

A second term full of challenges

These efforts, along with trillions of dollars in stimulus spending by the federal government, prevented a deeper and more lasting recession. The unemployment rate fell to 4.6% in October, still above the pre-pandemic level (3.5%) but well below the peak of 14.8% recorded in April 2020. However, some politicians and economists believe that decisions led by Jerome Powell risk leading to economic overheating and sustained inflation. After languishing for years below the 2% target set by the Fed, inflation accelerated by 6.2% in October year on year, a pace not seen in 30 years. Fed officials hammer out that this spike is mainly due to temporary factors.

The second term, which will begin next February, promises to be full of challenges, particularly in terms of the inclusion of minorities. Unemployment among African Americans is still nearly double that of white people, a disparity that Jay Powell never fails to mention in his public appearances. The other big difficulty for his mandate is to raise rates at the right time so as not to jeopardize the recovery.

Prior to becoming central bank boss, Jerome Powell was a researcher at the Bipartisan Policy Center think tank. A native of Washington, this lawyer by profession is a former partner from 1997 to 2005 of the American mega-fund Carlyle. He is also one of the richest people to ever run the Fed. During his confirmation hearings in 2018, he had thus revealed a fortune of between 18 and 55 million dollars.