(Reuters) - U.S. President Joe Biden's coming decision of whether to reappoint Federal Reserve Chair Jerome Powell after his term expires in February or hand the reins to somebody else will arrive at a critical juncture for the central bank.
Progressive Democrats want the Fed to take on a more expansive role in the economy, by beefing up efforts to bolster employment, heading off climate risk and addressing inequality. Conservatives want it to stick to its monetary policy lane, pay more attention to tamping down inflation and reduce its footprint in financial markets and on the oversight front.
Whoever the Democratic president picks, the next Fed chief will need to tackle major questions about monetary policy and the nature of money.
Here are some of the biggest challenges in the next four years:
After the coronavirus pandemic hit, the Fed slashed its benchmark overnight interest rate to near zero and bought trillions of dollars of Treasuries and mortgage-backed securities.
With the economy rebounding quickly, Fed policymakers will likely start winding down the asset purchases later this year.
But under a new policy framework adopted last August, they plan to wait to raise interest rates until the economy reaches full employment, and inflation is at 2% and on track to moderately exceed that level.
It's a promise that a new Fed chief may struggle to keep. Most Fed policymakers believe the current burst of above-2% inflation is temporary. But if the price rises prove more...
Read Full Story: https://money.usnews.com/investing/news/articles/2021-09-07/five-challenges-the-fed-chief-may-face-in-the-next-four-years
Your content is great. However, if any of the content contained herein violates any rights of yours, including those of copyright, please contact us immediately by e-mail at media[@]kissrpr.com.