UPDATE - Biden nominates Powell to lead Fed for 2nd term

ADDS REMARKS FROM BIDEN, FED CHAIR JEROME POWELL; REVISES DECK, CHANGES THROUGHOUT STORY

By Ovunc Kutlu

ANKARA (AA) - President Joe Biden nominated Federal Reserve Chair Jerome Powell to lead the US central bank for a second term, the White House said on Monday.

At the Fed helm since February 2018, during his four-year term Powell has tried to navigate the bank through the coronavirus recession by providing trillions of dollars of stimulus during the crisis and lowering interest rates to almost zero.

He has been criticized for keeping rates too low in the face of the US’ recent record-high inflation.

"While our country still faces challenges as we emerge from the pandemic, we have made enormous progress in bringing our economy back to life and getting Americans back to work," said a White House statement.

"Chair Powell has provided steady leadership during an unprecedently challenging period, including the biggest economic downturn in modern history and attacks on the independence of the Federal Reserve," it added.

-‘Urgent action’ needed against climate change

Biden also nominated Lael Brainard to serve as vice chair of the Federal Reserve System Board of Governors.

Before joining the board in 2014, Brainard served as treasury undersecretary from 2010 to 2013.

Biden said he is confident Powell and Brainard will focus on keeping inflation low, prices stable, and delivering full employment.

"Together, they also share my deep belief that urgent action is needed to address the economic risks posed by climate change, and stay ahead of emerging risks in our financial system," he said in the statement.

The president still has three vacant seats on the Federal Reserve board, with nominees he intends to announce in early December, according to the White House.

"At this moment of both enormous potential and uncertainty for our economy, we need stability and independence at the Federal Reserve," Biden told a later White House press conference, explaining his decision to keep on Powell, a holdover from the Trump administration.

Biden listed some of the major challenges to the economy such as supply chain bottlenecks, disruptions caused by spikes in COVID-19 cases, and elevated prices.

"It is the Fed's job to balance two key goals – to achieve maximum employment and keep inflation low and stable," said Biden.

Biden said Powell's "decisive leadership helped to stabilize the market and put the economy on track to robust recovery" when the economy was losing jobs and financial markets were panicking.

The president added that Powell reinforced the Fed's mission in delivering full employment and is set to address the threat of high inflation.

Powell has made clear that his top priority will be to accelerate the Fed's effort to address and mitigate the risk that climate change poses to the American financial system and economy.

"The Fed must be the leader among central banks globally in addressing climate-related financial risks," Biden said, noting that extreme weather has cost the US economy $600 billion over the last 10 years.

Biden also said Powell underscored that the Fed will take a more proactive role than US financial regulations require to stay ahead of emerging risks such as cryptocurrencies, innovations, and less regulated non-bank financial institutions.

If he is reconfirmed by the Senate, Powell said he will use the Fed's tools to support the economy and a strong labor market, and to prevent higher inflation from becoming entrenched.

Other key priorities include guarding the resilience of the financial system and addressing risks from climate change and cyberattacks, Powell added.

Brainard said her work will focus on bringing down inflation and keeping the economy sustainable for the future.