Wall Street is holding its breath. Will Powell be re-elected?
The term of Fed Chairman Powell will expire in February next year. By convention, the President of the United States usually announces the appointment around October, but as of Wednesday, the Biden administration has not made a choice.
US President Biden said on Tuesday that he will make a final decision on the Fed chairmanship in about four days. Earlier this month, he interviewed Powell and Fed Governor Brainard for the appointment.
Stock market storm
The trading of stocks and bonds by a number of Fed officials before has raised questions about whether it is suspected of insider trading. Among them are Fed Chairman Powell. In October last year, Fed Chairman Powell sold a stock index fund worth $1 to $5 million outside the quiet period of the Fed, just a few months after the Fed had formulated a large-scale loose monetary policy.
At present, two local Fed presidents who are caught in the "stock market storm" have announced their resignations, but Powell still sits firmly on the Diaoyutai. The White House evaluation team later stated that there was nothing wrong with Powell's transaction, and no one in the small circle of the Fed chairman's adviser mentioned Powell's transaction in October last year. Powell seems to have successfully passed the biggest obstacle to re-election.
Powell has a high probability of being re-elected
Powell has always been very dovish, and his loose monetary policy has won unanimous praise from Wall Street. During Powell's tenure, the U.S. stock market continued to rise, and the Fed took special measures to prevent the new crown epidemic from hitting the economy, which also gave a boost to the stock market. During Powell's tenure, the US Standard & Poor's 500 Index soared by about 70%, surpassing Yellen's roughly 60% gain during the four years when he was in charge of the Federal Reserve, and far exceeding Bernanke's 39% gain in eight years.
In addition, Powell's focus on employment has won praise from the Biden administration and Democratic policy analysts. As a private equity lawyer, Powell also won the support of some Republicans in Congress for his re-election.
The former chairman of the Federal Reserve and current U.S. Treasury Secretary Yellen has publicly expressed his support for Powell, revealing that he has discussed the appointment of the chairman of the Federal Reserve with President Biden. Although Yellen did not disclose any specific plans of the White House, he publicly praised "Powell's doing a good job."
However, Powell's inaction on inflation has also attracted a lot of criticism. Especially at this stage, prices continue to soar, and the Biden administration even regards stabilizing prices as its primary goal. However, compared to Powell's biggest rival, Fed Governor Brainard, the latter is considered more dovish, which has increased Powell's winning side.
But Brainard is not without chance.
First of all, she is the only Democratic governor within the Fed. She is not from Wall Street, has led the Treasury Department, and requires strict supervision of the financial industry. She is also a woman. For many left-wing Democrats, such a senior female official is simply the perfect candidate. .
Although Brainard is so good, it is still unknown whether he can impress Biden to make a decision to "change coaching" to the Fed.
According to data from online gambling sites, as of last week, Powell has a 74% chance of being re-elected as Fed chairman, while Brainard's chance of being nominated is 26%.
