What could Jerome Powell’s appointment as Fed chairman mean for interest rates in 2022?
President Joe Biden announced on Monday that he would appoint Federal Reserve Chairman Jerome Powell for a second term, his first ending in February 2022. Biden also announced his intention to appoint Fed Governor Lael Brainard – a member of the Fed since 2014 and former Secretary of the Treasury – as Vice Chairman of the Board of Governors of the Federal Reserve System. Brainard is the only Democrat currently in the Fed Board of Governors.
The nomination serves as a vote of confidence for Powell and the Fed’s monetary policy response to the economic effects of the COVID-19 pandemic.
“While much remains to be done, we have made remarkable progress over the past 10 months to get Americans back to work and jumpstart our economy,” he added. Biden said in a statement. “This success is a testament to the economic agenda I have pursued and the decisive action the Federal Reserve has taken under the chairmanship of Powell and Dr. Brainard to help us get through the worst downturn in modern American history and put us on the way to recovery.
“As I said before, we can’t just go back to where we were before the pandemic, we need to better rebuild our economy, and I have no doubts that President Powell and Dr Brainard are focused on sustaining the Low inflation, stable prices and full employment will make our economy stronger than ever, ”he said.
The Fed will likely continue its current interest rate trajectory with Powell in charge, meaning it could start raise the federal funds rate in 2022. As a result, interest rates will be pushed up, but you can take advantage of low rates now by refinancing your mortgage. It can also save you hundreds of dollars on your monthly payment. Visit Credible to compare several lenders at once and see how much you could save.
AS INFLATION IS INCREASING AT A RECORD PACE, WHAT IMPACT COULD BIDEN’S RECONSTRUCTION PLAN HAVE?
Confirmation of Fed positions goes to Senate
Biden’s appointments will now head to the Senate, where they are expected to pass. In 2018, Powell was confirmed in a bipartisan vote with 84 senators voting yes upon his appointment. Notably, Vice President Kamala Harris, then a senator from California, voted no to his appointment in 2018.
Powell could face opposition in the Senate from progressives who say he hasn’t been aggressive enough on climate change, according to a statement released by Sens. Sheldon Whitehouse (DR.I) and Jeff Merkley (D-Ore.).
“President Biden must appoint a Fed chairman who will ensure that the Fed fulfills its mandate to protect our financial system and shares the administration’s view that tackling climate change is the responsibility of every decision-maker . This person is not Jerome Powell, “the statement read.
The White House attributed the 5.6 million jobs created during the economic recovery and the 4.6% drop in unemployment – two years faster than expected – to Biden’s policies and Powell’s “stable” leadership.
With Powell likely to serve a second term after Senate confirmation, the central bank is expected to continue its current momentum to increase interest rates Next year. You can now take advantage of low rates by taking out a personal loan to consolidate high-interest debt. Visit Credible to compare several lenders at once and choose the one that offers the best interest rate for you.
FEDERATED TO START REDUCING ASSETS, ECONOMISTS INDICATE INTEREST RATES WILL BE HIGHER
What to expect from interest rates in 2022
Interest rates set to rise in the coming year as the Fed begins reduce its economic recovery and is looking to start raising rates. The Fed is currently planning it will increase the rates next year for the first time since the start of the coronavirus pandemic.
President Biden said he was confident in the leadership of Powell and Brainard to come out of the pandemic.
“Basically, if we are to continue building on this year’s economic success, we need stability and independence at the Federal Reserve – and I have full confidence after their trial by fire over the past 20 months that President Powell and Dr. Brainard provide the strong leadership our country needs, ”Biden said.
Take advantage of low rates now by refinancing your student loans and saving on your monthly payment. Visit Credible to speak with a student loans expert and get all of your questions answered.
Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.