Fed Under Powell to Prioritize Full Employment, White House Adviser Says
(Bloomberg) -- The Federal Reserve during Jerome Powell’s second term as chair would focus on getting the U.S. back to full employment, according to one of President Joe Biden’s top economists.
Biden announced Monday that he opted to keep Powell as head of the U.S. central bank and to elevate Lael Brainard to vice chair, signaling continuity amid the Covid-19 economic recovery.
The choice indicates an ongoing focus on bringing more Americans back to the labor market, according to Heather Boushey, a member of the White House Council of Economic Advisers.
The Fed’s monetary policy during the pandemic showed a priority on increasing economic activity and jobs, and “the president wanted to appoint someone who would focus on making sure that we get the economy back to full employment,” Boushey said on Bloomberg Television’s “Balance of Power” with David Westin.
As the U.S. economy recovers, supply chain disruptions and labor shortages have exacerbated inflation, sending prices up the most in 30 years in October. Boushey and other Biden administration officials -- including the president’s top labor economist, Janelle Jones, -- have said that the spike is transitory and that monetary policy should support economic expansion.
The comments are in line with Powell’s own stated views. While the Fed announced the start of tapering of the pandemic-era bond-buying program, Powell has said the central bank wouldn’t raise interest rates until that tapering is complete. That’s set to keep upward pressure on inflation.
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