Federal Reserve Governor Lael Brainard staked out some different ground from Chair Jerome Powell as the policy makers await a presidential decision on who should lead the central bank in the coming four years.
Brainard, considered a leading candidate to take over as Fed chief in February if Powell doesn’t get a second term, said she’s much more inclined to use regulatory tools to head off financial excesses like asset bubbles than the Powell-led central bank has been.
In remarks late Friday to the prestigious Aspen Economic Strategy Group, she also exhibited a greater willingness to adopt a central bank digital currency, and a greater eagerness to get on with the decision than Powell has.
The veteran policy maker, though, did line up with Powell on Fed’s raison d’etre, monetary policy, saying the central bank needed to see a further notable improvement in the jobs market before starting to scale back its massive bond purchases.
President Joe Biden isn’t expected to decide whom to choose to lead the central bank until September at the earliest. The nomination would be subject to confirmation by the Senate. Powell’s current four-year term as chair expires in early February.
Dennis Kelleher, president of the Better Markets anti-Wall Street advocacy group, said the choice will probably come down to Brainard or Powell.
Kelleher supports the more regulatory-minded Brainard to head the central bank at a time “when the Fed will have a dramatic impact on Americans’ financial and economic well-being, but also an impact on the agenda and values” of the Democratic president.
Unlike Powell, a 68-year old Republican who was elevated to the Fed’s helm by then-President Donald Trump, Brainard is a card-carrying Democrat. A Fed governor since 2014, Brainard, 59, also served as a senior Treasury Department official in Obama administration.
Brainard didn’t set out to draw a distinction with Powell during her appearance in Colorado. The speech released by the Fed ahead of her appearance there was focused on the economy and monetary policy, areas where her views are seemingly in sync with the chair.
Like Powell, Brainard said in the speech that she was alert to the risk of persistently high inflation but didn’t believe that would occur.
“Recent high inflation readings reflect supply–demand mismatches in a handful of sectors that are likely to prove transitory,” she said in the prepared remarks.
Brainard didn’t deliver the speech to the group, though she referenced many of the points it made in a session entirely devoted to questions from Aspen Economic Strategy Group Director Melissa Kearney and others attending the annual meeting.
In her responses, some of Brainard’s differences with Powell came out.