By Jeff Mason and Steve Holland
WASHINGTON – U.S. President Joe Biden cited unprecedented pressure that former President Donald Trump directed at Federal Reserve Chair Jerome Powell as one reason to renominate him on Monday.
Bucking critics in his own Democratic party, Biden said the Republican appointee’s independence made him the best choice to lead the U.S. central bank with Lael Brainard, who had also been under consideration for the top job, as vice chair.
Biden laid out his reasoning for his decision during remarks to reporters that included multiple references to the chairman by the first name “Jay” that he is also known by.
“We need stability and independence at the Federal Reserve. Jay has proven the independence that I value in .. the Fed chair,” Biden said. “In the last administration, he stood up to unprecedented political interference and, doing so, successfully maintained the integrity and credibility,” of the Fed, Biden said.
Trump in tapping Powell for the post in 2017 became the first president since Democrat Jimmy Carter not to reappoint a Fed chief installed by his predecessor and then quickly soured on his choice.
Within months of Powell taking the helm in February 2018, Trump began regularly castigating him in public as Powell continued with a slate of interest rate increases begun under former chair Janet Yellen.
Trump believed Powell was not doing enough to boost the economy and, along with it, Trump’s political prospects, and explored firing him. The episode was seen as one of the most significant threats to the central bank’s independence in a generation.
Biden’s commitment to the Fed’s independence is likely to be tested in the coming months.
Expectations are building in financial markets that the Fed will be forced to address high inflation with as many as three interest rate increases over the course of next year. These hikes could slow the pace of the economy and the job market’s recovery, results that could hurt Biden politically.
Biden noted that Powell was confirmed to the position of Fed chair by 84 votes in the 100-member U.S. Senate in 2018.
“I believe that having Fed leadership with broad bipartisan support is important, especially now,” with such a “politically divided” nation, Biden said.
“I believe we need to do everything we can to take the bitter partisanship of today’s politics out of something as important as the independence and credibility of the Federal Reserve,” he said.
(Reporting by Jeff Mason and Steve Holland; Editing by Chris Reese, Heather Timmons and Andrea Ricci)