Fed chief has Biden’s ‘confidence,’ but no decision on renomination

October 5, 2021

By Ann Saphir

(Reuters) – U.S. President Joe Biden expressed “confidence” in Federal Reserve Chair Jerome Powell on Tuesday after an influential senator in his party’s progressive wing stepped up her critique of the central bank chief and raised questions about his leadership.

Powell “poses a danger to our economy and that’s why I oppose him for renomination,” Senator Elizabeth Warren told CNBC on Tuesday, citing what she sees as his overly lax approach to bank oversight as well as his handling of possible trading improprieties by fellow Fed policymakers.

Asked about Warren’s comments, White House spokeswoman Karine Jean-Pierre told reporters aboard Air Force One as Biden traveled to Michigan on Tuesday: “Yes, he does have confidence in … Powell at this time.”

Two of the Fed policymakers have resigned, and Powell has initiated a broad review of the central bank’s ethics policies and asked the Fed’s watchdog to investigate the trading at issue.

With about four months left in Powell’s four-year term, U.S. Treasury Secretary Janet Yellen said the decision to renominate him is up to the president “and the president hasn’t yet made that decision.”

In doing so, she said in a CNBC interview, “he will talk to many people and consider a wide range of evidence and opinions.”

In August, Bloomberg reported that Yellen had told senior White House advisers that she backs Powell for a second term.

First appointed as Fed chair by former President Donald Trump, Powell’s current term at the helm expires in February.

‘I TRUST THE FED’

Warren, a member of the Senate banking committee that oversees the Fed, publicly came out against Powell’s renomination last week. Asked who she would support, Warren declined to discuss “private conversations” with the White House.

Senator Jon Tester’s support for a second Powell term as chair remained unchanged, a spokesperson for the centrist Democrat confirmed in an email on Tuesday. Tester is also a member of the banking committee.

Meanwhile, several Republican senators including Richard Shelby have indicated their support for Powell and their disinclination to support Governor Lael Brainard, seen as the most likely alternative nominee to Powell.

Yellen was also asked if she thought the Fed had made the right decisions regarding the economy, especially given the unexpectedly high inflation this year that has a number of critics second-guessing its loose policy stance.

“I trust the Fed to make the right decisions,” Yellen, who served one term as Fed chair immediately before Powell, told CNBC.

“You know we have been hit by an incredibly unusual shot. On the one hand, we’re all almost 6 million jobs short of where we weren’t before the pandemic, which means a lot of people who still need jobs. On the other hand, many firms are finding it difficult to hire,” she said.

“We’ve had extraordinary shifts in the pattern of demand … and I know the Fed is trying to sort through the implications of that – supply bottlenecks have developed that have caused inflation. I believe that they’re transitory, but that doesn’t mean they’ll go away over the next several months.”

(Reporting By Dan Burns; Additional reporting by Ann Saphir, Doina Chiacu and Jarrett Renshaw; Editing by Chizu Nomiyama and Bill Berkrot)

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