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Biden Choses Powell Over Brainard As Federal Reserve Chairman

President Joe Biden has nominated Jerome Powell for a second term as Fed Chairman, with Lael Brainard pegged as Vice Chair.

Jerome Powell has been nominated to lead the Federal Reserve next year, President Joe Biden said Monday, with Lael Brainard pegged as Vice Chair. 

“Chair Powell has provided steady leadership during an unprecedently challenging period, including the biggest economic downturn in modern history and attacks on the independence of the Federal Reserve,” the White House said in a statement. “During that time, Lael Brainard – one of our country’s leading macroeconomists – has played a key leadership role at the Federal Reserve, working with Powell to help power our country’s robust economic recovery.”

Both positions will need to be confirmed by a majority vote in the Senate, where Democrats hold a narrow 51-49 majority. President Biden will delivery remarks on the appointment at 1:20 pm Eastern time. 

U.S. stocks extended gains immediately following the President's nominations, with contracts tied to the Dow Jones Industrial Average indicating a 180 point opening bell gain and those linked to the S&P 500 priced for a 20 point advance from Friday's record high close.

Benchmark 2-year note yields jumped to a March 2020 high of 0.57%, more than double the higher end of the Fed's current target rate, while 10-year note yields rose 2 basis points to 1.592%.

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Powell, whose term expires on February 5, has steered the economy through the worst of the coronavirus pandemic, and also showed impressive resolve in resisting pressure from former President Donald Trump during the bulk of his four-year tenure.

However, he's also been linked to controversy surrounding the individual trading accounts of top Fed officials -- which lead to the resignations of Dallas Fed President Robert Kaplan and the early retirement of Boston Fed President Eric Rosengren -- and has face criticism for his reluctance to slow address the fastest acceleration in consumer price inflation in more than thirty years. 

Brainard, on the other hand, is said to have support amongst progressives in the Democratic party -- lead by Senator Elizabeth Warren -- have been pushing for the selection of the Fed Governor on the basis that she's likely to be tougher on the banking sector, an issue Warren has raised several times during her questioning of Powell in Senate committee hearings.

Brainard is also seen as both dovish on Fed rate policy and more aligned with the need to blend monetary policy into the fight against climate change and crack down on cryptocurrency risks.