Here’s How Markets Might React If Biden Picks Lael Brainard as Fed Chair

A decision by U.S. President Joe Biden to nominate Lael Brainard as Federal Reserve chair instead of Jerome Powell could provide a narrow window of opportunity for traders in rates and foreign-exchange markets -- even if the shock wears off relatively quickly.

With the perception that Brainard might be less inclined to tighten monetary policy than the incumbent, the initial reaction in markets could see short-term interest rates pull back and a weakening of the dollar. But such moves could prove short-lived, as whichever candidate ends up in charge will ultimately be hostage to the uncertain inflation and growth landscape.