Inside the White House, Brainard is viewed as a person who could successfully implement the Inflation Reduction Act and the semiconductor funding in the bipartisan CHIPS and Science Act of 2022, both signature pieces of legislation that Biden is likely to promote in his bid for reelection.
In her most recent speech, Brainard, 61, said “even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2% on a sustained basis.”
Meantime, the council’s next head will advise Biden as the economy flirts with recession and a battle brews with Republicans over whether to raise the federal debt limit. Managing relations with China is also high on the White House’s agenda.
A Democrat, Brainard was also previously considered a possible successor to Powell. Biden instead tapped Powell for a second term, promoting Brainard at the same time to the central bank’s No. 2 role.
Brainard and Powell have similar views on monetary policy, but differ over bank regulation, with Brainard opposing at nearly every step Powell’s modest rollbacks of some of the tough curbs imposed on banks after the financial crisis. Her support for the Fed to do more to fight climate change has won her support among Democrats.
After steep rate increases last year, the Fed moderated the size of its moves to half a percentage point in December and is expected to down-shift again to a quarter point when officials meet next week.
While Brainard has supported rate hikes since the Fed pivoted to fight inflation, she was earlier in the camp arguing that higher prices would be transitory and would fade as the pandemic eased.
That dovish stance, shared by Powell and others at the Fed, has since been acknowledged as a serious policy error.
Brainard was nominated as a Fed governor in 2014 by President Barack Obama. Prior to joining the central bank, she had served as undersecretary for international affairs at Obama’s Treasury. She was a deputy director of the NEC under President Bill Clinton and also served in his Treasury.
Between 2001 and 2009, she was a senior fellow and then a vice president at the Brookings Institution in Washington. She taught applied economics at the Massachusetts Institute of Technology in the early 1990s.