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Biden to reappoint Powell as Fed chair

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WASHINGTON: US President Joe Biden will reappoint current Federal Reserve Chair Jerome Powell (pictured) for a second four-year term starting February next year, according to an overwhelming majority of economists polled this week.

Powell took office from Janet Yellen as chair of the Board of Governors of the Fed in February 2018 and has had to maneuver the economy through its worst crisis since World War Two, battered by the Covid-19 pandemic which started early last year.

The White House will decide in coming months whether it wants Powell to remain but any decision to replace him could flare market reaction just as the US economy is battling high inflation and employment activity is lagging the overall recovery.

Ninety percent of economists, or 36 of 40, in response to an additional question in the July 12-15 poll on the US economy, said Biden would choose the status quo.

“It’s (Powell’s reappointment) likely at this point. Powell does have some strong competition, in particular from Lael Brainard, one of his colleagues as governor. She’s the second most likely, but Powell is the favorite right now,” said James Sweeney, chief economist at Credit Suisse.

Jim O’Sullivan, chief US macro strategist at TD Securities, agrees. “I guess it’s like a tradition. If you’re seen as doing a decent job for continuity then the president kind of re-appoints, even if it was a president of a different party that appointed him in the first place,” he said.

In congressional hearings Powell pledged “powerful support” to complete the economic recovery from the pandemic and said the Fed should stay focused on getting as many people back to work as possible. He also said the sudden spike in inflation was transitory. — Reuters

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