The Daily Update: Biden Nominates Powell / Biden To Take On OPEC+?

Yesterday President Biden announced that Jerome Powell had won the two-horse race for the nomination of Federal Reserve chair, in doing so extending his time as the most powerful economic official in the world for another four years. Biden said he would nominate the other runner, Lael Brainard, as vice chair. In addition, ‘President Biden still has three vacant seats on the Federal Reserve Board of Governors to fill, including the important position of Vice Chair for Supervision. The President intends to make those appointments beginning in early December and is committed to improving the diversity in the Board’s composition’, the White House press release stated.

The decision will be seen as a reward for Powell’s handling of the economy during the global pandemic, plus ensuring policy continuity in the face of heightened inflation and continued economic uncertainty. Not that everyone will agree with the call though.

‘If we want to continue to build on the economic success of this year, we need stability and independence at the Federal Reserve — and I have full confidence after their trial by fire over the last 20 months that Chair Powell and Dr. Brainard will provide the strong leadership our country needs," Biden said in a statement.

During brief remarks following the nomination, Powell said he was committed to both keeping inflation in check and bringing the economy to full employment. ‘We know that high inflation takes a toll on families, especially those less able to meet the cost of essentials’ Powell said, adding ‘We will use our tools both to support the economy and a strong labour market and to prevent inflation from becoming entrenched’. Brainard echoed the tone, adding she was committed to putting working Americans at the centre of her agenda. ‘This means getting inflation down at a time when people are focused on their jobs and how far their paychecks will go’.

As I mentioned not everyone agreed with the call. Senator Elizabeth Warren has been one of Powell’s biggest critics over the last few years, even going so far as to call Powell a ‘dangerous man to head up the Fed’. That has not changed one iota, as she announced she will vote against Powell’s nomination, citing his ‘failures on regulation, climate and ethics’. However, she will support the vice chair nomination, saying ‘It’s no secret I oppose Chair Jerome Powell’s renomination, and I will vote against him. I will support the President’s nomination of Lael Brainard as Vice Chair. Powell’s failures on regulation, climate, and ethics make the still-vacant position of Vice Chair of Supervision critically important’.

There was also talk last night that Biden is preparing to release oil from the Strategic Petroleum Reserve, potentially as soon as today, in concert with several other countries. The move, in cooperation with South Korea, India and Japan comes after recent calls on OPEC+ countries to increase oil production have fallen on deaf ears. The talk is of releasing 35 million barrels over time.

OPEC+ representatives of course are not too chuffed at the rumours, stating ‘the release of millions of barrels from the inventories of their biggest customers is unjustified by current market conditions and the group may have to reconsider plans to add more oil production when they meet next week’.