Who is following Lael Brainard?

Fed Vice Lael Brainard and Fed Chairman Jerome Powell

new York Lael Brainard starts a new job. The deputy head of the US Federal Reserve (Fed) will in future head the National Economic Council in the White House, making her the most important economic adviser to US President Joe Biden.

After eight years on the Fed’s governing body, the 61-year-old leaves a large gap at the central bank, as the economists from Beacon Policy Advisors emphasize in a recent analysis. Brainard was an important voice of the monetary policy doves, i.e. the faction that prefers a looser monetary policy and always wanted to keep an eye on the negative consequences for the labor market when fighting inflation.

She was only appointed deputy chief in May, which gave her voice even more weight. The search for a suitable successor to Brainard is ongoing, but Biden will need a great deal of finesse.

Getting monetary policy right in times of persistently high inflation “is extremely important, both for the country and for the re-election of the president,” said Krishna Guha, head of central bank strategy at Evercore ISI. A candidate who is viewed too much as a monetary policy hawk could be counterproductive for Biden.

After all, hawks are primarily focused on fighting inflation, even if that means destroying jobs on a large scale and sending the country into recession. Even an economist at a big bank might face opposition because the Democrats don’t like to be close to Wall Street. The party also attaches great importance to diversity.

>> Read here: Biden makes Fed Vice Chair his economic policy adviser

A number of outside candidates are currently under discussion, including Jason Furman and Karen Dynan. Both are economics professors at Harvard University. Dynan was Secretary of State and Chief Treasury Secretary under then-President Barack Obama. Biden was Vice President in the White House at the time. Furman headed the National Economic Council during Obama’s second term, from 2013 to 2017.

Internal candidates are also being discussed. These include Austan Goolsbee, who only took over as head of the Chicago regional Fed in January, and Mary Daly, who heads the San Francisco Fed. The next Fed meeting will take place in mid-March, when interest rates are to be raised again.

More: Brainard and Bernstein – Biden’s new power duo for the US economy

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