Biden to appoint Brainard chief economic adviser, leaving Fed vacuum

By Steve Holland and Lindsay Dunsmuir

Feb 14 (Reuters) – U.S. President Joe Biden is expected to appoint Federal Reserve Vice Chairman Lael Brainard as his top economic policy adviser on Tuesday, a source familiar with the matter said, ahead of the 2024 election .

Brainard’s imminent move from an autonomous central bank to a role in the White House comes as the Federal Reserve faces its own challenges in its fight to reduce inflation, leaving an intellectual and political vacuum at a key time.

Brainard, an experienced fiscal and monetary affairs chief, would replace White House National Economic Council director Brian Deese, who announced his resignation.

Additionally, Jared Bernstein, a Biden confidant, is expected to replace Cecilia Rouse as chair of the Council of Economic Advisers, the source said. Rouse has announced his intention to retire.

The White House declined to comment. Bloomberg News first reported the changes.

The reform of Biden’s economic team comes at a time when the Federal Reserve continues to try to reduce inflation without causing a recession. According to the Federal Reserve’s preferred measure, inflation is more than double its target of 2%.

The next director of the National Economic Council and chairman of the Council of Economic Advisers will help shape the economic policy of the Biden administration, from executive orders to congressional spending bills and debt ceiling increases, from a more hostile House of Representatives now controlled by Republicans. .

Brainard, a Harvard-educated Democrat, was an economics heavyweight at the central bank, known for her meticulous and thorough training and particular expertise in the global economy. This likely means a key position will remain vacant for months at a particularly sensitive time for the central bank.

For nearly a decade there, he extended his influence over both monetary policy and financial regulation, combining his political acumen in previous White House and Treasury roles with his economic clout.

Although Biden decided in late 2021 to reappoint Federal Reserve Chairman Republican Jerome Powell to the top job, that decision was accompanied by the appointment of Brainard as number two, which ensured a counterbalance in the monetary policy and regulation. Unlike Brainard, a doctor in economics, Powell is an investment banker and a lawyer by training.

Wall Street nightmare Brainard has also pushed the Federal Reserve for more action to force banks to factor in climate change risks and has been the most prominent proponent of a central bank digital currency, two moves that pitted her against Powell and other senior officials over scope and ambition.

(Reporting by Steve Holland and Lindsay Dunsmuir; Editing in Spanish by Benjamín Mejías Valencia)