Lael Brainard emerges as contender to become top White House economist

Lael Brainard, the second-in-command at the Federal Reserve, is a contender to be the next top White House economist, which would be a major change for the US central bank as it grapples with the worst inflation problem. in years.

According to people familiar with the matter, the Biden administration is considering replacing Brian Deese as the next head of the National Economic Council with Brainard, who was undersecretary for international affairs at the Treasury Department during the Barack Obama administration. .

Deese has held the position since 2021 and has helped steer the White House’s economic policy through continued shocks from Covid-19 and the ensuing inflationary boom. Although Deese is expected to leave the White House, no date has been set for his departure.

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There are other contenders besides Brainard in the mix for the job, and Biden has not made a final decision on the role, people with knowledge of the matter said. Also under consideration are Gene Sperling and Bharat Ramamurti, current White House economic officials, as well as Sylvia Mathews Burwell, former White House budget director and president of American University.

The Washington Post first reported that Brainard was being considered for the role.

If elected, she would leave a top leadership job at the Fed vacant as it argues how much more it could raise its policy rate after its most aggressive campaign since the early 1980s. After raising the federal funds rate by more than 4 percentage points since March through a series of jumbo 0.75 percentage point rate hikes, officials are preparing to return to more usual quarter-point increments at their upcoming policy meeting on next week.

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Brainard, a Democrat who has been at the Fed for nearly a decade, has been one of the most vocal voices on the Federal Open Market Committee, advocating a prudent approach to tightening monetary policy while taking into account the economic and financial risks that could be there. with borrowing costs rising rapidly.

She has also pushed for tighter regulation of the nation’s largest banks as well as the central bank to more directly incorporate climate-related risks into its oversight responsibilities — positions that have earned praise from the progressive wing of the Democratic party.

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Before she was named to the vice-chairman position in November 2021, Brainard was considered a leading contender for the Fed’s top job and previously Treasury secretary.

If Brainard replaces Deese, the Biden administration will have to name another vice chairman, having already largely reshuffled the top ranks of the central bank. In addition to naming Jay Powell as chairman, the White House elevated economists Lisa Cook and Philip Jefferson as governors along with Michael Barr as vice chairman of oversight.

Lawmakers blocked Biden’s front-runner for the oversight role, Sarah Bloom Raskin, whose calls for regulators to be more proactive about climate-related financial risks.

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