Instant View: Biden renominates Powell as Fed Chairman, Brainard as vice chair

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FILE PHOTO: Federal Reserve Board building is pictured in Washington

NEW YORK (Reuters) – Federal Reserve Chair Jerome Powell was nominated for a second four-year term by President Joe Biden on Monday, extending a tenure that began somewhat by chance, survived blistering criticism from former President Donald Trump, and now positions the ex-investment banker to finish the most consequential revamp of monetary policy since the 1970s.

Lael Brainard, the Federal Reserve board member who was the other top candidate for the job, will be vice chair, the White House said.

MARKET REACTION:

STOCKS: S&P stock futures added slightly to gains and were up 0.37%, pointing to a firm Wall Street open.

BONDS: The yield on the benchmark 10-year note edged higher, and was last 1.5960%. The 2-year yield rose to 0.5659%

FOREX: The dollar index reversed a small loss and was up 0.3%.

COMMENTS:

GREGORY DACO, CHIEF U.S. ECONOMIST, OXFORD ECONOMICS, NEW YORK

    “It’s probably the best of all outcomes. You maintain a dynamic duo at the helm of the Fed, you ensure continuity from a policy perspective, and you essentially have two of the most apt candidates both as Fed chair and Fed vice chair for the near future. I think it’s a sound decision. It’s one that will ensure that the Fed has the right type of personnel to guide us through the second part of this recovery phase, which will be a tricky one with high inflation and questions as to whether the Fed needs to tighten monetary policy or not.”

    “I would expect confirmation in the Senate to be certainly straight forward given that Powell has strong bipartisan support. Even if he loses a couple of votes on the Democratic side, he should get through Senate confirmation.”

RANDY FREDERICK, MANAGING DIRECTOR OF TRADING AND DERIVATIVES, CHARLES SCHWAB, AUSTIN, TEXAS

“Markets like predictability and so they are reacting positively. They don’t like uncertainty and while Brainard may have been a fine choice, the markets would not know what to expect from her even though the general consensus was that it meant lower rates for longer, but we don’t know that for certain.”

(Compliled by the Global Finance & Markets Breaking News team)

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