Federal Reserve Chairman Not Expected To Be Replaced, Analysts Say

(PatriotWise.com)- Federal Reserve Chief Jerome Powell has received a lot of criticism for his department’s role in pumping too much liquidity into the U.S. markets during the coronavirus pandemic.

But, despite these feelings, many investors believe that re-nominating him to lead the U.S. Federal Reserve again would provide stability at the central bank that is very much needed at this point.

Wall Street officials believe that Powell will be nominated to serve in the role for another four years by President Joe Biden. He was initially nominated and confirmed under former President Donald Trump back in 2017.

Powell’s term runs through February 2022.

Since he began his term in February of 2018, risk assets have soared. The S&P 500 index gained 71% since he manned the position in 2018. New records were also hit multiple times, and that was helped in part by the various emergency measures the Fed took in response to the COVID-19 pandemic.

According to people who are familiar with the situation, the Biden administration is discussing who should chair the Federal Reserve. On Tuesday, White House Press Secretary Jen Psaki said she wouldn’t comment on President Joe Biden’s timeline for making a final decision.

Wall Street officials believe that Powell should be re-nominated. One of those people is Anders Persson, who serves as the chief investment officer of global fixed income at Nuveen — an asset manager.

Persson said Biden should re-nominate Powell because of the trust the Fed chair built among investors while working under two different presidents with vastly different approaches. Persson said:

“We have been quite impressed by his work so far” and his “overall ability to communicate to the market. The more clarity and stability we can get, that’s exactly what the market is looking for.”

Whoever the next Fed chair is will be tasked with leading the pullback of the coronavirus-related relief. The Fed has already announced that by the end of this year, they will start tapering off the $120 million in bond purchases it has been making monthly.

The Fed is also keeping a close eye on surging inflation that’s being caused, in part, by the supply chain disruptions across the world.

Other people in Wall Street leadership positions believe the ongoing coronavirus pandemic is a main reason why Biden should re-nominate Powell — there’s just too much uncertainty with the Delta variant.

As a portfolio strategist with Natixis Investment Managers Solution, Jack Janasiewicz, said of Powell:

“I don’t see how you give him anything but good reviews. When you think about replacing Powell with someone else, that lack of continuity would spark concerns in the marketplace.”

If Biden decides not to re-nominate Powell, it’s possible that the president could look to Lael Brainard, who serves as the Fed Governor.

It should be known in the coming weeks who Biden will nominate for the position of Fed chair. Wall Street is certainly hoping for some stability with the re-nomination of Powell.