Will Biden’s Picks for the Fed Alter Its Hawkish Path?
Chair Jerome Powell is up for renomination to lead a central bank with a slate of new appointees. Bond traders should focus squarely on him, not the other shifting seats.
Focus on Jerome Powell and Lael Brainard for the Fed’s direction.
Photographer: Zach Gibson/BloombergPresident Joe Biden is set to reshape the Federal Reserve this year just as the central bank is shifting in a more hawkish direction to combat the highest level of inflation in four decades. Ahead of Fed Chair Jerome Powell’s renomination hearing in the U.S. Senate this week, Bloomberg Opinion columnists Daniel Moss and Brian Chappatta met online to discuss how the new composition of the board could sway monetary policy at this critical juncture.
Brian Chappatta: The big story for markets and the U.S. economy heading into 2022 is that the Fed is clearly unnerved by inflation that has proved to be more persistent than those within the Eccles building anticipated several months ago. Powell “pivoted” in front of the Senate Banking Committee on Nov. 30, noting it’s “a good time to retire the word transitory.” The Federal Open Market Committee’s meeting a couple of weeks later was considered so hawkish that minutes of the discussion sent financial markets tumbling last week.