Members of Congress oppose Powell's reappointment

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Fed Chair Jerome Powell will stay in office for the next five months. For your record, Powell's term as Fed's chairman expires on February 1, 2022, and US President Joe Biden will need to appoint a new candidate. Notably, the US Federal Reserve is not controlled by the government, the Congress, or the President. However, the head of the Fed is appointed by the Congress and the US President. This is how Joe Biden and Democrats may determine the future policy of the Fed for years to come. We mentioned a few weeks ago that Democrats would want to replace Powell due to his hawkish stance. By the way, former US President Donald Trump had repeatedly pressured the Fed to lower the key interest rate and to ease the monetary policy as much as possible. However, Jerome Powell, who was appointed by Donald Trump, did not agree with the President and kept the rate at a high level. In the coming years, the US economy may need a very soft monetary approach. Therefore, the head of the central bank should have a dovish stance on the monetary policy.

It was reported today that 5 Congressmen, who are also members of the House Committee on Financial Services, sent a letter to Joe Biden urging him not to reappoint Jerome Powell. They noted that he did not do enough to tackle the issue of climate change. The lawmakers agreed that Powell was performing well and acknowledged his contribution to the development of the US economy. However, they think that the Fed Chairman should pay more attention to climate risks and racial and economic justice. "To move forward with a whole of government approach that eliminates climate risk while making our financial system safer, we need a Chair who is committed to these objectives. We urge the Biden Administration to use this opportunity to appoint a new Federal Reserve Chair," the letter reads.

With a new head of the central bank, the monetary policy may become as dovish as possible. For the US currency, this indicates a prolonged decline in the long term. Thus, for the pound and the euro, such global trends that continued for 8 to10 years have ended just recently. Reasonably, the US currency is expected to decline in the course of the next 5-6 years. Soft monetary policy will definitely help to achieve this goal. The current stimulus measures are likely to be suspended in the next year or two. Sooner or later, the interest rates will start to rise, but this process will be smoother with the new head of the Federal Reserve.

The material has been provided by InstaForex Company - www.instaforex.com

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