Vice chairs can serve as board policy messengers and it would be an immediate achievement if Brainard articulated how the Fed is going to balance its two goals.
“They are going to liftoff” from zero interest rates “when they can say maximum employment is achieved,” said former Fed Governor Laurence Meyer. “She is going to be an important voice in that.”
The role of vice chair also elevates Brainard’s visibility as an obvious pick for another top policy position in the administration down the road.
‘Higher Profile’
“It is a higher-profile role than she previously had on the board, so when she speaks it will mean more,” said Jeremy Kress, an assistant professor of business law at the University of Michigan and former Fed board attorney. “Whether that leads to future opportunities, there are so many variables.”
A lot depends on how Brainard defines her role.
Vice chairs in the past have served as valuable chief operating officers such as Roger Ferguson, to close allies of the chair such as Donald Kohn, to somewhat independent voices such as Janet Yellen and Stanley Fischer.
Brainard’s brief currently at the board is expansive. She oversees Fed board operations, financial stability, payments, and reserve banks, while sitting on supervisory committees. By contrast, current Vice Chair Richard Clarida oversees the three research and forecasting divisions at the Fed and Powell entrusted him with some of the organization around the new framework.
David Wilcox, a former chief forecaster at the Fed board and now director of U.S. economic research at Bloomberg Economics, said she is already serving as a “key, discreet internal adviser and partner with the chair.”
At the same time, she conducts her own analysis and can articulate a different view from where the Fed consensus is standing, Wilcox said.
“She has done that with considerable political deftness,” he said.
—With assistance from Laura Davison.
This article was provided by Bloomberg News.