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    Fed Officials Firm Up Plans for Swift Pullback of Economic Help

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    Federal Reserve officials are coalescing around a plan to raise interest rates steadily starting in March and then move swiftly to shrink the central bank’s big bond holdings as policymakers look to cool the economy at a moment of rapid inflation.While policymakers are likely to keep an eye on the conflict in Ukraine as they proceed with those plans, for now geopolitical developments seem unlikely to be enough to derail the central bank’s campaign to beat back price increases.Policymakers have spent the past week broadcasting that the interest rate increase they plan to make at their March meeting — one that investors already fully expect — will be the first in a string of rate moves. Central bankers also appeared to be converging on a plan to promptly start shrinking the Fed’s holdings of government-backed debt, which were vastly expanded during the pandemic downturn as the Fed snapped up bonds in a bid to keep markets functioning and cushion the economy.The central bank bought $120 billion in Treasury and mortgage-backed securities for much of 2020 and 2021, but officials have been tapering those purchases and are on track to stop them entirely in March. By quickly pivoting to allow securities on its nearly $9 trillion balance sheet to expire without reinvestment — reducing its holdings over time — the Fed would take away an important source of demand for government-backed debt and push rates on those securities higher. That would work together with a higher Fed policy interest rate to make many types of borrowing more expensive.Higher borrowing costs should weigh on lending and spending, tempering demand and helping to slow price gains, which have been uncomfortably rapid. Data out this week is expected to show further acceleration in the central bank’s preferred inflation gauge, which was already running at its fastest pace in 40 years.Lael Brainard, a Fed governor who has been nominated by President Biden to serve as vice chair, said last week that she believed a “series” of rate increases were warranted.“I do anticipate that it will be appropriate, at our next meeting, which is in just a few weeks, to initiate a series of rate increases,” she said on Friday at a forum held by the University of Chicago’s Booth School of Business in New York. Ms. Brainard said the Fed would then turn to shrinking its balance sheet, a process that could be appropriate to start “in coming meetings.”Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: We asked readers to send questions about inflation. Top experts and economists weighed in.What’s to Blame: Did the stimulus cause prices to rise? Or did pandemic lockdowns and shortages lead to inflation? A debate is heating up in Washington.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.Michelle Bowman, another Fed governor, echoed that balance sheet reduction could start imminently, saying in a speech on Monday that the Fed needs to begin to reduce its bond holdings “in the coming months.”The precise timing of shrinking the balance sheet is a topic of debate. John C. Williams, president of the Federal Reserve Bank of New York, suggested on Friday that the process could start “later this year,” which could suggest in coming months or slightly later. But officials have been uniformly clear that a pullback is coming, and likely more quickly than investors had expected until just recently.Although policymakers plan to shrink their holdings of Treasury bonds and mortgage-backed securities by allowing them to expire, rather than by selling the debt, the Fed’s latest meeting minutes suggested that officials could eventually move to outright sales of mortgage-tied securities. The minutes also suggested that officials thought “a significant reduction” in the balance sheet would be warranted.The pace of the moves would be rapid compared with the last time the Fed increased interest rates, from 2015 to the end of 2018. Then, officials shrank the balance sheet only gradually and pushed up interest rates glacially, once per quarter at fastest.Borrowing costs have already begun to rise as investors adjust to the Fed’s more rapid-fire plans. Markets expect six or seven quarter-point interest rate increases this year. The rate on a 30-year mortgage has climbed to 3.9 percent from about 2.9 percent last fall, when the Fed began its policy pivot.The Fed’s policy changes “will bring inflation down over time, while sustaining a recovery that includes everyone,” Ms. Brainard said, adding that as the Fed signals that it will raise rates, “the market is clearly aligned with that.”But tensions between Russia and Ukraine could create both additional inflationary pressures and risks to growth. So far, there has been little signal that the fallout will be enough to prompt the Fed to change course.“The Federal Reserve pays very close attention to geopolitical events, and this one of course in particular as it’s the most prominent at this point,” Ms. Bowman said on Monday, ahead of the escalation in tensions.“We do recognize that there are significant opportunities for potential impacts on the energy markets, as we’re moving forward, if things were to deteriorate,” she added.Oil and gas prices have already risen during the conflict and could continue to climb, leading to a higher peak in headline inflation, which includes prices at the pump. The Fed typically avoids reacting to fluctuations in energy prices when setting its policy, given their volatility, but the potential disruption could make inflation trends all the more painful for consumers.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    Senate Republicans Stall Crucial Vote on Fed Nominees

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    President Biden’s plans to reshape the Federal Reserve suffered a setback on Tuesday as Republicans delayed a key vote on his five nominees for its Board of Governors.Republicans did not show up for a committee decision that would have advanced the nominees to the full Senate for a confirmation vote. Because a majority of the Senate Banking Committee’s members need to be physically present for such votes to count, their blockade effectively halted the process.The unusual maneuver, spearheaded by Senator Patrick J. Toomey of Pennsylvania, was driven by Republican opposition to Mr. Biden’s pick for the nation’s top bank cop, Sarah Bloom Raskin.The president has renominated Jerome H. Powell as Fed chair and has tapped Lael Brainard, a current Fed governor, as vice chair. He has also nominated the economists Lisa D. Cook and Philip N. Jefferson as Fed governors. But Ms. Raskin — a longtime Washington policymaker and lawyer whom Mr. Biden has picked as vice chair for bank supervision — has garnered the most pushback.To prevent her nomination from advancing to the full Senate, Republicans held up the vote on all five nominees.Democrats and the White House criticized Republicans for engineering a boycott and scrambled for a solution that could get the nominees to a confirmation vote. Senator Sherrod Brown, Democrat of Ohio and chair of the Banking Committee, on Tuesday shot down the idea that he would separate Ms. Raskin from the other nominees to allow the rest to advance. Ms. Raskin could face tough odds of passing, especially on her own.By nominating five of the Fed’s seven governors and all of its highest-ranking leaders, Mr. Biden had a chance to shake up the institution. While some of his picks — like Mr. Powell — represented continuity, together they would have made up the most racially and gender-diverse Fed leadership team ever.Sarah Binder, a professor of political science at George Washington University who co-wrote a book on the politics of the Fed, said Democrats would need to come up with a strategy to overcome the Republican block or the nominees could get stuck in limbo.“It is really a delay — it might yet scupper Raskin,” she said. She noted that Democrats could break the nominations up or try to garner enough support among the full Senate to override the rules and get the nominees past the committee, though that might be a challenge.“It’s pretty uncharted, and they’re going to have to find a way,” Dr. Binder said.Molly Reynolds, a senior fellow in governance studies at the Brookings Institution, said that outside of trying to change Senate rules — which she called the “nuclear option” — Democrats’ clearest avenue was probably to negotiate with Republicans.“They just need a Republican to show up,” she noted, explaining that the senator would not even need to vote yes for the committee to secure a majority and move the candidates along.Tuesday’s maneuver was the latest step in Mr. Toomey’s opposition campaign against Ms. Raskin, who would serve as arguably the nation’s most important bank regulator if confirmed.Mr. Toomey has criticized Ms. Raskin for past comments on climate-related regulation, worrying that she would be too activist in bank oversight. More recently, he has pressed for more information about her interactions with the Fed while she was on the board of a financial technology company that was pushing for a potentially lucrative central bank account.“Until basic questions have been adequately addressed, I do not think the committee should proceed with a vote on Ms. Raskin,” Mr. Toomey said in the statement.White House officials criticized his move as inappropriate when the Fed is wrestling with rapidly rising prices and preparing to raise interest rates next month.“It’s totally irresponsible, in our view — it’s never been more important to have confirmed leadership at the Fed,” said Jen Psaki, the White House press secretary. She added that the administration’s focus now was moving the nominees through the committee and called Mr. Toomey’s probing of Ms. Raskin’s background “false allegations.”The dispute centers on the revolving door between government regulators and the arcane world of financial technology.Mr. Toomey and his colleagues have said Ms. Raskin, a former Fed and Treasury official, had contacted the Federal Reserve Bank of Kansas City on behalf of Reserve Trust, a financial technology company. Reserve Trust secured a strategically important account at the Fed while she was on its board: To this day, it advertises that it is the only company of its kind with what’s known as a “master” account.Master accounts give companies access to the U.S. payment system infrastructure, allowing firms to move money without working with a bank, among other advantages.Republicans are blocking the process over concerns about one of the nominees, Sarah Bloom Raskin.Pool photo by Ken CedenoMs. Raskin said in written responses to Mr. Toomey’s questions early this month that she did “not recall any communications I made to help Reserve Trust obtain a master account.” But Mr. Toomey said in a subsequent letter that the president of the Kansas City Fed, Esther George, had told his staff that Ms. Raskin called her about the account in 2017.The Kansas City Fed has insisted that it followed its normal protocol in granting Reserve Trust’s master account and noted that talking with a firm’s board members was “routine.” But Mr. Toomey has continued to push for more information.“Important questions about Ms. Raskin’s use of the ‘revolving door’ remain unanswered largely because of her repeated disingenuousness with the committee,” Mr. Toomey said in his statement Tuesday.Democrats have emphasized that Ms. Raskin recently committed to a new set of ethics standards, agreeing not to work for financial services companies for four years after she leaves government — a pledge Ms. Cook and Mr. Jefferson also made, at the urging of Senator Elizabeth Warren, Democrat of Massachusetts.Ms. Brainard agreed to a weaker version of that commitment that would bar her from working at bank holding companies and depository institutions outside of mission-driven exceptions like banks that target underserved communities, a spokesperson for Ms. Warren’s office said Tuesday.Mr. Powell declined to make a similar commitment, the spokesperson said. The Fed chair did signal that he would adhere to the administration’s ethics rules, which ban paid work related to government service for two years upon leaving office.On Tuesday, a dozen Republican chairs in the room where the committee met remained empty while Democrats occupied their seats across the room. Democrats took a vote to show support, though it was not binding, and Mr. Brown pledged to reschedule.“Few things we do as senators will do more to help address our country’s economic concerns more than to confirm this slate of nominees, the most diverse and most qualified slate of Fed nominees ever put forward,” Mr. Brown said, chiding Republicans for skipping the session.“They’re taking away probably the most important tool we have — and that’s the Federal Reserve — to combat inflation,” he later added.The Fed has four current governors, in addition to its 12 regional presidents, five of whom vote on monetary policy at any given time. Mr. Powell has already been serving as chair on an interim basis, since his leadership term officially expired this month. Even if the nominees advance, Ms. Raskin may struggle to pass the full Senate. Winning confirmation would require her to maintain full support from all 50 lawmakers who caucus with Democrats and for all those lawmakers to be present unless she can win Republican votes. Senator Ben Ray Luján, Democrat of New Mexico, has been absent as he recovers from a stroke.“The Republicans are playing hardball because they can,” said Ian Katz, the managing director at Capital Alpha Partners. “At the least, it delays her confirmation. It could have the ultimate effect of killing it.” More

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    Fed nominees commit to not taking part in finance’s revolving door.

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    Three of President Biden’s nominees to the Federal Reserve committed to lawmakers that, if confirmed to their posts, they would not work in financial services for four years after leaving the Fed.The pledge comes amid growing concern about the revolving door between Washington and Wall Street.The three potential Fed governors in question — the economists Lisa D. Cook and Philip N. Jefferson and a longtime government official and lawyer, Sarah Bloom Raskin — said they would “commit not to seek employment or compensation” from any financial services company after leaving the board, which oversees the largest banks.Their promises came at the urging of Senator Elizabeth Warren, the Massachusetts Democrat who has criticized the so-called revolving door between government and finance. Fed officials regularly go to work for Wall Street after leaving the institution, making the commitment notable.“These are the strongest ethics standards ever agreed to by Federal Reserve Board nominees,” Ms. Warren said in a statement on Wednesday. “U.S. Senators and the American people can be confident that these public servants will make sound economic policy decisions in the public’s best interest.”Republicans have been questioning Ms. Raskin’s nomination by highlighting her stint on the board of directors for a financial technology company, Reserve Trust.The company got a critical account with the Fed — known as a master account — while Ms. Raskin was on the company’s board. The account provided the firm with advertisable benefits, like access to the Fed’s payments system.During her confirmation hearing before the Senate Committee on Banking, Housing and Urban Affairs last week, senators questioned whether she had used her previous positions at the Fed and Treasury to help secure the account. Ms. Raskin did not confirm or deny whether she had been in touch with the company’s local Fed bank while she sat on its board.The Federal Reserve Bank of Kansas City, which approved the master account, has said that it “did not deviate from its review process in evaluating this request.”Senator Patrick J. Toomey, Republican of Pennsylvania, asked Ms. Raskin to respond in writing by Wednesday about the Reserve Trust situation.Ms. Raskin, in her response, said she did “not recall any communications I made to help Reserve Trust obtain a master account. Had I done so, I would have abided by all applicable ethics rules in such communications.”Amanda Thompson, the communications director for Republicans on the Banking Committee, called those responses a “case of selective amnesia.”The White House has continued to stand behind its nominees. Christopher Meagher, a spokesman for the White House, called the Republican questioning “smears” and said that they “continue to fall flat in the face of scrutiny and facts.”Dr. Cook, Dr. Jefferson and Ms. Raskin are up for confirmation alongside Jerome H. Powell — who Mr. Biden renominated to be Fed chair — and Lael Brainard, a Fed governor who is the Biden administration’s pick for vice chair.Senator Sherrod Brown, Democrat of Ohio and the chairman of the Banking Committee, said last week that all five candidates would face a key committee vote on Feb. 15. More

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    Lael Brainard predicts that the Fed will engineer a soft economic landing.

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    Lael Brainard, a Federal Reserve governor whom President Biden has nominated to be the central bank’s new vice chair, said the Fed would communicate its plans for removing economic support clearly — and suggested that the job market would continue to grow even as the Fed pulled back its help and as inflation began to ease.Ms. Brainard faced vetting before the Senate Banking Committee on Thursday. She fielded questions about her qualifications and her views on the Fed’s role in preparing the financial system for climate change and the outlook for the United States economy.In a hearing marked by limited contention — one that suggested Ms. Brainard could enjoy some bipartisan support — the nominee expressed a willingness to combat high and rising prices by removing Fed help for the economy. The central bank is already slowing its bond-buying program, and it has signaled that it could soon raise interest rates and begin to shrink its asset holdings in a bid to further cool off the economy.“I believe we’ll be able to see inflation coming back down to target while the employment picture continues to clear,” Ms. Brainard said, after noting that the Fed would communicate its plans for withdrawing support clearly. “There are some short-term constraints there that I think are limiting people from coming back into the labor market. As those are lifted, I think we’ll have continued gains.”The jobless rate has been plummeting, but millions of workers are still missing from the job market compared with before the pandemic, and many employers complain that they cannot find employees, suggesting that health concerns and other challenges are keeping many people on the sidelines for now. At the same time, price inflation is rapid, with a report on Wednesday showing that a key price index rose in December at the fastest pace since 1982.Ms. Brainard acknowledged that pandemic imbalances that have roiled global shipping and shut down factories are part of what is driving high inflation today — and that the Fed’s policies can do little to fix those supply problems. But she highlighted that Fed policies that affect borrowing costs can have a significant impact in cooling off demand.“We have a set of tools — they are very effective — and we will use them to bring inflation back down,” Ms. Brainard said.Fed officials have increasingly signaled that they expect to raise interest rates in 2022 to keep high inflation from becoming permanent. Markets increasingly expect four rate increases in 2022, which would put the Fed’s short-term policy interest rate just above 1 percent. More

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    Lael Brainard, Nominee for Fed Vice Chair, Calls Inflation ‘Too High’

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    Lael Brainard, a Federal Reserve governor whom President Biden has nominated to be the central bank’s new vice chair, plans to tell lawmakers that the central bank will use its policies to wrestle inflation under control when she testifies at her confirmation hearing.Ms. Brainard, who will face vetting before the Senate Banking Committee at 10 a.m. on Thursday, is likely to garner considerable support among Democrats and may pick up some Republican votes, though how many are unclear at this point.Her nomination — and her new role at the Fed if the Senate confirms her — comes at a challenging economic moment. While unemployment is falling rapidly, inflation has taken off, with a report on Wednesday showing that a key price index rose in December at the fastest pace since 1982.“We are seeing the strongest rebound in growth and decline in unemployment of any recovery in the past five decades,” Ms. Brainard will say, according to her prepared remarks. “But inflation is too high, and working people around the country are concerned about how far their paychecks will go.”Ms. Brainard will also tell lawmakers that the Fed’s policies are “focused on getting inflation back down to 2 percent while sustaining a recovery that includes everyone,” calling that the central bank’s “most important task.”After nearly two years of propping up a virus-stricken economy by keeping interest rates at rock bottom and buying government-backed debt, Fed officials began to slow their large bond purchases late last year. That program is on track to end in March. Officials have signaled in recent weeks that they also expect to lift interest rates to make borrowing more expensive, slowing demand and helping to cool the economy.Markets increasingly expect four rate increases in 2022, which would put the Fed’s short-term policy interest rate just above 1 percent.“Today the economy is making welcome progress, but the pandemic continues to pose challenges,” Ms. Brainard will say. “Our priority is to protect the gains we have made and support a full recovery.”Ms. Brainard has been at the Fed since 2014, spanning the Obama, Trump and Biden administrations. Before that, she was a top international official at the Treasury Department. An economist and a Democrat, she had been seen as a potential contender to be Treasury secretary or Fed chair during the Biden administration.She has a good working relationship with Jerome H. Powell, the Fed chair, whom Mr. Biden has renominated for a second term. She will use her prepared statement to emphasize that she has worked for many administrations in Washington — Democrats and Republicans alike — while pledging to take the Fed’s mission to fight inflation and its independence from partisan wrangling seriously.“I will bring a considered and independent voice to our deliberations,” she will say. More

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    Lael Brainard is Tapped For Vice Chair of the Federal Reserve

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    President Biden said on Monday that he would nominate Lael Brainard as the Federal Reserve’s vice chair, the No. 2 role at the Fed and one that could give her a stronger mandate to influence everything from the cost of money to the future of digital cash.Ms. Brainard, who has been a Fed governor since 2014, is already part of the inner policy circle of the Fed chair, Jerome H. Powell. But her elevation to vice chair will make her Mr. Powell’s closest collaborator on monetary policy matters if she is confirmed by the Senate.The vice chair holds little power officially, but in practice is regularly the person who floats new ideas in speeches and who helps to guide a Fed chair’s thinking on policy matters.Ms. Brainard’s elevation comes at a pivotal economic moment. The Fed is wrestling with how to set policy at a time when inflation has shot higher but millions of jobs remain missing. Like Mr. Powell, Ms. Brainard has been wary of reacting to high prices too swiftly by lifting interest rates to choke off growth, worried that it could diminish job market opportunities. But both are carefully watching the price trajectory, with an eye on ensuring that high inflation does not become a long-lasting trend.“I’m committed to putting working Americans at the center of my work at the Federal Reserve,” Ms. Brainard said during a news conference Monday at the White House, where Mr. Biden introduced his picks. “This means getting inflation down at a time when people are focused on their jobs and how far their paychecks will go.”Ms. Brainard also pledged to ensure that the economy would be “sustainable for future generations” and that the Fed would reflect “the diversity of the communities we serve.”Her views on financial regulation and climate change have won her plaudits from some progressives but drawn concern from Republicans, raising questions about how much support she might win in the Senate. Senator Patrick J. Toomey of Pennsylvania, the top Republican on the Banking, Housing, and Urban Affairs Committee, applauded Mr. Powell’s reappointment but couched his support for Ms. Brainard.“While I have concerns about regulatory policies that Governor Brainard would support as vice chair, I look forward to meeting with her to discuss these and other matters,” Mr. Toomey said in a statement on Monday.Senator Kevin Cramer of North Dakota, another Republican on the committee, also said he had concerns about Ms. Brainard’s regulatory policies and looked forward to discussing those matters with her.Ms. Brainard has been a major proponent of a more active Fed role in making sure the financial system is prepared for potential fallout from climate change. She gave a speech at the Fed’s first climate-focused conference in 2019 and has recently focused on the need for climate scenario analysis for banks, which would test how well they would hold up amid extreme weather events, sea level change and other climate-tied risks.As the sole Democrat left at the Fed board in Washington after 2018, Ms. Brainard used her position to draw attention to efforts to chisel away at bank rules, a process that was being driven by Randal K. Quarles, the Fed’s vice chair for supervision, who is stepping down in December. In the process, she created a rare public disagreement at the consensus-driven central bank, dissenting from policy changes more than 20 times in 2019 and 2020.Ms. Brainard often released detailed explanations of her dissents, laying out a road map of what changes were made and why they might be problematic. For instance, when the Fed streamlined its stress-test approach, she supported simplification in spirit — but disagreed with how it was done.“Today’s rule gives a green light for large banks to reduce their capital buffers materially, at a time when payouts have already exceeded earnings for several years on average,” she said, publishing an analysis of how she came to that conclusion, one that Mr. Quarles disagreed with.Her new position will not give her more direct say over financial regulation than she previously had — governors all have a single vote on regulatory decisions — but she and her record of dissents could be a resource for the new person coming into the vice chair for supervision job.Senator Sherrod Brown, an Ohio Democrat and chairman of the Banking, Housing, and Urban Affairs Committee, said Ms. Brainard had “spent her life fighting for a stronger, fairer economy.”“At this moment, when workers are finally starting to see more power in our economy, we need a vice chair who understands that our economic recovery must strengthen our communities and put workers first,” Mr. Brown said in a statement.Ms. Brainard would be the third woman in the Fed’s 108-year history to hold the job, following in Janet L. Yellen’s and Alice Rivlin’s footsteps. Her new role would put her in a powerful position to weigh in on the path ahead for digital currency as the Fed contemplates whether it needs to issue one, something some other global central banks have done or are in the process of doing. Her more elevated position could also give her a bigger bully pulpit on climate-related issues.Ms. Brainard is a longtime Washington policymaker. She played a leading role in European debt crisis and Chinese currency deliberations during the Obama administration as a Treasury Department official, and she worked for the National Economic Council during the Clinton administration. She earned her economics doctorate at Harvard and was an up-and-coming professor at the Massachusetts Institute of Technology before moving to Washington to pursue a career in policy.Ms. Brainard was initially viewed as a leading candidate for Biden administration Treasury secretary, and her name continues to surface as a potential successor should Ms. Yellen, who now holds that top policy role, step down. More

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    Biden Will Keep Jerome Powell as Federal Reserve Chair

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    WASHINGTON — President Biden said Monday that he would renominate Jerome H. Powell, the Federal Reserve chair, to another four-year term, opting for policy continuity at a moment of rapid inflation and economic uncertainty and betting that the Fed will do more to help workers reap the gains of the pandemic recovery.The much-awaited decision was a return to tradition in which the central bank’s top official is reappointed regardless of partisan identity — a norm bucked by former President Donald J. Trump, who appointed Mr. Powell instead of renominating Janet L. Yellen.While some progressive Democrats criticized Mr. Powell’s reappointment, the move was primarily greeted with bipartisan praise that suggested an easy path to confirmation.Mr. Biden also said he planned to nominate Lael Brainard, a Fed governor whom many progressive groups had championed to replace Mr. Powell, to serve as the Fed’s vice chair, a move that helped mollify some criticism on the left.The president and his top aides believe that Mr. Powell has done well in supporting the economy through the pandemic recession and a halting recovery, while amassing credibility by standing up to political pressure from Mr. Trump. But Mr. Biden is also making a calculated bet that the Fed chair will be more aligned with his views on the economy and, in particular, inflation, than he is with Republicans in the Senate who have demanded quicker action from the Fed to tamp down rising prices.“At this moment, of both enormous potential and enormous uncertainty for our economy we need stability and independence at the Federal Reserve,” Mr. Biden said during remarks at the White House. “And we need people of character and integrity, who can be trusted to keep their focus on the right long-term goals of our country, for our country.”The stakes in the choice are unusually high.Inflation has jumped because of booming consumer demand, tangled supply lines and labor shortages that have helped to push up the cost of used cars, couches and even food and rent. Yet millions of workers are missing from the labor market compared with before the pandemic.The central bank is charged with keeping consumer prices stable while striving for maximum employment, and striking that balance could require difficult policy choices in the months ahead.Mr. Biden, who is facing a delicate balancing act within his own party, deliberated over the pick for months. He consulted with both progressive and moderate Democrats along the way, seeking their views on inflation, worker considerations, financial regulation and climate change policy at the Fed.That included Senator Elizabeth Warren, who had called Mr. Powell “a dangerous man,” and suggested she would not support his renomination during a testy hearing in late September. Mr. Biden met with Ms. Warren on Nov. 9 in the Oval Office to discuss Fed appointments and called her last Thursday, before he had settled on a pick, according to a person with knowledge of the discussions.On Friday, Mr. Biden called Mr. Powell and Ms. Brainard to inform them that he had made his choice. The decision was influenced in large part by Mr. Biden’s belief that he and Mr. Powell are philosophically aligned when it comes to keeping interest rates low and continuing to support the economy until more people are working and wages are rising.On Monday, Mr. Biden said he believed the Fed had more work to do to get to “maximum employment.”“That’s an economy where companies have to compete to attract workers, instead of workers competing with each other for jobs, where American workers get steady wage increases after decades of stagnation, and where the benefits of economic growth are broadly shared by everyone in the country, not just concentrated for those at the top,” he said.Yet some economists, and many Republicans, say the Fed runs the risk of allowing inflation to spin out of control if it does not start to pull back efforts to fuel economic growth, with workers demanding increasingly higher wage increases to cover rising costs, resulting in 1970s-style inflation.Mr. Biden has been suffering politically as prices rise for food, gas and airplane tickets. The president has repeatedly tried to reassure Americans that his economic policies will ultimately calm inflation, a message he is expected to repeat during remarks on Tuesday.But his larger economic agenda has become tangled in the politics of price increases, particularly as the president pushes Senate Democrats to coalesce around a $2.2 trillion climate change and social policy bill that Mr. Biden says will ease inflationary pressures in years to come but Republicans warn will stoke higher prices immediately.Mr. Biden said he was certain that both Mr. Powell and Ms. Brainard would work to stabilize inflation and keep the economic recovery on track.“We’re in a position to attack inflation from the position of strength, not weakness,” he said.Mr. Powell, who appeared alongside the president and Ms. Brainard at the White House, acknowledged the challenge ahead.“We know that high inflation takes a toll on families, especially those less able to meet the higher costs of essentials like food, housing and transportation,” he said, adding that the Fed would “use our tools both to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.”Mr. Powell’s reappointment suggests that the White House, which has a chance to fully reshape the Fed, is not aiming to completely overhaul the institution.The Biden administration already has one vacant governor role to fill, and two more seats will open early next year, giving Mr. Biden room to appoint at least three of seven governors. The president must also fill several leadership roles, including the Fed’s vice chair for supervision, a powerful position given its influence on bank oversight.Mr. Biden has been under pressure from progressives and moderate Democrats to pick a diverse slate of leaders for the Fed who would prioritize tough bank regulation and do what they could to address climate change risks in the financial system.Lael Brainard is the president’s choice to be the Federal Reserve’s vice chair.Justin T. Gellerson for The New York TimesMr. Powell has faced opposition from some progressive Democrats, who have faulted him for not using the Fed’s tools to help combat climate change and for voting to loosen financial rules for the nation’s biggest banks.He has also come under criticism for an ethics scandal that took place while he was overseeing the central bank. Two of the Fed’s 12 regional presidents made significant financial trades for their private accounts in 2020, when the Fed was actively rescuing many markets from pandemic fallout.Mr. Biden tried to ease at least some of those concerns, saying that Mr. Powell had assured him that the Fed would “accelerate” efforts to address and mitigate the risk that climate change poses to the economy.Mr. Biden also said he planned to soon nominate a new vice chair for supervision. In conversations with Mr. Biden, Mr. Powell convinced the president he would follow the lead of that person in setting financial regulatory policy, according to people with knowledge of the matter.Whether that will be enough to appease Mr. Powell’s critics remains to be seen. Ms. Warren said in a statement on Monday that she would not vote for Mr. Powell’s confirmation. Still, she did not recount her litany of concerns about him.Another critic, Senator Sheldon Whitehouse of Rhode Island, who opposed Mr. Powell’s reappointment, said on Monday that was “disappointed” in Mr. Biden’s decision. But he did not say whether he would vote no on his nomination.“I sincerely hope that, if confirmed, Powell will reassess his past opposition to utilizing the Fed’s regulatory tools to minimize climate-related risks to the financial sector,” he said.Other Democrats were more supportive, including Senator Sherrod Brown of Ohio, who praised Mr. Powell for helping steer the economy through the pandemic. Mr. Brown’s position is important — he is the chairman of the Senate Banking Committee, which oversees the Fed and will handle the confirmation hearings for both Mr. Powell and Ms. Brainard.Republicans, who supported Mr. Powell when he was nominated as chair by Mr. Trump, also lauded Mr. Biden’s decision.Senator Patrick J. Toomey, Republican of Pennsylvania and the ranking member on the Senate Banking Committee, released a statement saying he would support Mr. Powell’s nomination, as did several other of his party’s senators. That full-throated support did not extend to Ms. Brainard, however, with Mr. Toomey and other Republicans saying they had some concerns about her views on financial regulation and other issues.The big challenge ahead for Mr. Powell is deciding when — and how quickly — to remove pandemic-era economic support that the central bank has been using to cushion workers, businesses and financial markets.The Fed has so far decided to slow its large bond-purchase program, a first step toward withdrawing monetary policy support that will leave it more nimble to raise interest rates next year if reining in the economy becomes necessary.The federal funds rate has been set to near-zero since March 2020, keeping many types of borrowing cheap and helping to fuel home and car purchases and other types of demand that in turn set the stage for strong hiring. Raising it could cool off growth and weaken inflation.Yet trying to slow price gains would come at a cost. Workers are still trickling back after severe job losses at the onset of the pandemic, and the Fed is hoping to give the job market more space and time to heal. That’s especially true because continued waves of infection may be keeping many people from searching for work, either out of health concerns or because they lack child care. More

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    Biden Renominates Powell as Fed Chair

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    Whether it’s reporting on conflicts abroad and political divisions at home, or covering the latest style trends and scientific developments, Times Video journalists provide a revealing and unforgettable view of the world.Whether it’s reporting on conflicts abroad and political divisions at home, or covering the latest style trends and scientific developments, Times Video journalists provide a revealing and unforgettable view of the world. More