The Fed decision comes at a complicated political moment, as Mr. Powell’s future hangs in the balance. President Biden’s administration is deliberating whether it should keep the Fed chair on when his term ends early next year. It is also debating who should serve in two other roles: vice chair and vice chair for bank supervision.
Janet L. Yellen, the Treasury secretary, told Reuters that the decision would come “reasonably soon,” and told CNBC she had advised Mr. Biden to pick someone who was experienced and credible, and had praised Mr. Powell to him.
On Tuesday, Mr. Biden was asked whether he had decided on a Fed chair nominee, if he would detail what he was looking for in candidates and whether he was worried about having too little time to get nominees confirmed. The president responded: “no, no, and no.”
“I’m not going discuss it with you because that’s in train now, we’ll be making those announcements fairly quickly,” Mr. Biden said during a news conference in Glasgow, Scotland, where he’s attending a global climate summit.
Whoever leads the Fed in 2022 will have their work cut out for them. The Fed’s preferred inflation gauge climbed by 4.4 percent in the year through September, more than twice the central bank’s annual goal, and with airfares rebounding, rents picking up and couches and used cars still hard to come by, it seems likely that unusually strong price pressures will last into next year.
“If we see signs of relief on the supply side, it will leave the Fed comfortable to continue to guide that the end of tapering does not mean the start of hikes,” Michelle Meyer, chief U.S. economist at Bank of America, and her colleagues wrote in a recent analysis.
“But the Fed will need to hike earlier if supply-side constraints and elevated inflation persist, wage inflation picks up and inflation expectations continue to climb.”
Article source: https://www.nytimes.com/2021/11/02/business/economy/fed-jerome-powell-rates-inflation.html
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