Janet Yellen backs Jerome Powell’s reappointment as Fed chairman

President Joe Biden, however, has yet to decide who will lead the Fed

Jerome Powell’s reappointment as Federal Reserve chairman has the backing of US Treasury Secretary Janet Yellen. AFP

US Treasury Secretary Janet Yellen has told senior White House advisers she supports reappointing Jerome Powell as Federal Reserve chairman, according to sources.

President Joe Biden has not yet made a decision, the sources said. They said he is likely to do so on or around Labour Day.

Mr Powell was elevated to Fed chairman by President Donald Trump in 2018, replacing Ms Yellen. The position has a four-year term.

Officials at the White House and the Treasury declined to comment.

The White House has been looking more widely for possible candidates for the position, according to sources. A team of advisers has been examining the public speeches and comments of candidates to consider, paying special attention to views on the labour market, they said.

Uncertainty about the economic impact of the Delta variant of the virus may trigger more caution about changing leadership at the Fed in the midst of a crisis, two of the sources said. The next few months may prove particularly, with the coronavirus casting more unease about the pace of the economic recovery, including the path of monetary policy.

Ms Yellen’s backing gives Mr Powell an enormous boost as her almost two decades of experience at the central bank, including four years at its helm, make her counsel valuable.

For Mr Powell and his backers, including Republican politicians and many on Wall Street who view him as a safe pair of hands, a signal of support from Ms Yellen comes at an important time. Mr Powell will deliver a much-anticipated speech on Friday at the Kansas City Fed’s annual Jackson Hole symposium, possibly signalling when and how the central bank is likely to begin withdrawing some of its extraordinary support for the economy.

While interest rates are expected to remain near zero at least well into next year, several Fed officials have signalled their eagerness to begin reducing the size of monthly bond purchases this year. Mr Powell has promised not to surprise markets with that eventual move.