US senator Elizabeth Warren (Democrat, Massachusetts) today told Federal Reserve chairman Jerome Powell that she would not back a second term as leader of the central bank, with Powell's term ending in February unless re-appointed.
At the Senate Banking Committee, Ms Warren said: “Your record gives me grave concern, and that makes you a dangerous man to head up the Fed”.
The Washington Post reported details of the meeting, which was demanded by law as part of the Covid protocols ongoing in the States. Powell told attending politicians and legislators that the current rising inflation might last longer than first thought.
The Fed has been on record repeatedly claiming the present inflation is transitory, and Powell's speech reassured officials that the US economy had “continued to strengthen” - but needed time to overcome the current supply chain issues.
Powell told the Senate: “Inflation is elevated and will likely remain so in coming months before moderating. As the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors. These effects have been larger and longer lasting than anticipated, but they will abate, and as they do, inflation is expected to drop back toward our longer-run 2% goal.”
Up until now (politically at least), Powell has enjoyed cross-party support as leader of the Fed – especially given the Covid pandemic catching the world off guard, but as time has gone on, criticism of Powell's leadership has grown. Regular calls for tapering of stimulus, as well as the raising of interest rates are coming from business voices, but now politicians such as Warren orr Representative Alexandria Ocasio-Cortez would like to see the back of Powell for doing too little to regulate the banking system and to drive recovery in America.
President Biden and his administration will be able to fill four roles at the Federal Reserve early next year, and Jerome Powell will fear that the bumpy return to normality could signal the end of his tenure at the helm.