And the big pandemic governor imposed by Trump and then criticized by the former president loves Democrats who want to renew in February. But there is a stumbling block for Republicans, who will not tolerate a monetary tightening that would wipe out Wall Street.
Perhaps now is the time for that Jerome Powell. The Federal Reserve Chairman imposed the highest central bank in 2018 instead of Janet Yellen From then-President of the White House, Donald Trump, only to be shot multiple times via Twitter by Trump himself over Powell’s resistance to a rate cut, is being played again. The last one to succeed was Ben BernankeConservative from 2006 to 2014, the man who handled the major subprime mortgage crisis and the Lehman Brothers drama.
Monetary policy is as important now as it has always been in the United States. The highly accommodative phase, made up of near-zero rates and massive debt purchases, is slowly passing the hand on to an undoubtedly resilient approach but able to pave the way for monetary tightening. At stake are Joe Biden’s epidemiological plans, which are now stalled in the US Congress, where Powell himself heard a few days ago. With trillions of money in the real economy, higher prices and therefore inflation are guaranteed. Powell can decide whether to calm everything down, or cause the markets to fall or not.
There are those who want a Powell repeat (term ends in February) and they are the Democrats. Brad ShermanThe California representative in the House of Representatives revealed that the majority of his party’s advocates asked Biden himself to reconfirm Jerome Powell for a second term. “I went through two economic crises: 2008 and 2020. And 2020 has been much better managed,” Sherman said. financial times. “Reassuring people at a time when we are dealing with Covid and a certain level of inflation is a good idea.”
In short, Democrats are working to persuade Biden to reassert Powell. Which he said gave an answer to the height of the pandemic, and set up a promising new policy framework. Who knows what Republicans, who have criticized the governor heavily in the Trump administration years, will be reluctant to cut interest rates to allow new capital to enter the economy. Then there’s a lot of monetary tightening that Republicans, traditionally close to Wall Street but hostile to excessive public intervention in the economy, fear. In short, the game is wide open.
While politics plays its game, Powell charts the monetary map for the coming months. He explained to Congress that “the central bank intends to add strong support to the economy until a full recovery and there is still a long way to go from assessing the bottom line to reduce bond purchases, but it will provide a margin of notice before reducing bond purchases.” . However, the Fed is “prepared to adjust its policy if inflation escalates too much”.