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The Editors

Powell Is the Right Choice for the Fed

In nominating the current chair for a second term, Biden puts the emphasis where it rightly belongs: on continuity, not politics.

What took you so long?

What took you so long?

Photographer: Alex Wong/Getty Images

President Joe Biden is right to nominate Federal Reserve Chair Jerome Powell for a second term. No disrespect to Lael Brainard, who was under consideration as an alternative; the White House says she’ll be nominated as vice chair instead. Both are eminently capable central bankers. But two good reasons argued for Powell: the need for continuity, and the need to resist politicizing the Fed at a moment when its independence might come into question.

The Biden administration has no quarrel with the way the Fed has conducted monetary policy during Powell’s first term. Challenged by the pandemic, the central bank maintained strong and steady support for demand and succeeded in keeping financial markets functioning well — neither of which should be taken for granted. In recent months, inflation has climbed higher than most analysts expected owing to supply-chain disruptions. Some of this rise is likely to be temporary, but how much is unclear. Policy needs to be adjusted, and this is in train: The Fed has announced it will taper its bond purchases over the coming months, and financial markets are starting to anticipate an earlier lift-off in interest rates.