Federal Reserve Vice Chairman Lael Brainard is a candidate for the White House economic policy directorship, joining a list that includes Deputy Treasury Secretary Wally Adeyemo and Commerce Secretary Gina Raimondo, said Wednesday. two people familiar with the process.
Brainard is currently the second-largest central banker, where she plays an influential role in monetary policy and regulation as the Fed battles to bring down high inflation.
President Biden is looking for a replacement for National Economic Council Director Brian Deese, who is expected to leave soon. Interviews are underway to replace him, according to the sources who declined to discuss an ongoing personnel process.
The White House and the Fed declined to comment.
Biden is also expected to consider other candidates for the job, including Gene Sperling, a senior Biden economic adviser in charge of pandemic stimulus spending who led the NEC during the Clinton and Obama administrations; Sylvia Mathews Burwell, former Secretary of Health and Human Services in the Obama administration; and Bharat Ramamurti, deputy director of the NEC, the people said.
The next NEC director will help shape the Democratic administration’s economic policy, from executive orders to congressional spending bills and raising the debt ceiling, in the face of a more hostile, now-controlled House of Representatives by Republicans. Biden’s team is also beginning to craft an economic message for his slated 2024 re-election campaign.
Biden’s populist economic agenda has focused on strengthening unions, improving business competition, changing the tax code with credits for parents, and championing industrial policy in areas such as as electric vehicles and semiconductor manufacturing to better compete with China.
But curbing high inflation became the administration’s top economic priority last year as rising costs began to irritate voters. Administration officials believe the Fed can help stage a “soft landing,” where inflation and economic growth slow to more sustainable levels without putting many Americans out of work.
The consumer price index increased by 6.5% in 2022, but prices fell in December, a sign that inflation is starting to come down significantly. The jobless rate also fell to a five-decade low of 3.5% last month.
Possible hole at the Fed
If Brainard, a Democrat, is selected for the position of head of the NEC, the Fed would be left with a key role unfilled for months at a time when it is still trying to bring down inflation without causing a recession.
Brainard has been at the Fed for nearly a decade, with an increasingly powerful tenure. She lost the top job when Biden renamed Fed Chairman Jerome Powell a Republican in late 2021, but was elevated to second-in-command.
Even before assuming the role, Brainard was a frequent dissenting vote against moves under former President Donald Trump’s administration and under Powell to ease banking regulations, and called on the Fed to force financial firms to put aside more capital.
The Harvard-educated economist also pushed the Fed to better understand how climate change could affect the macroeconomy and the financial system, pitting her against some of her colleagues at the Fed.
She previously served as the Treasury’s contact for international affairs during the Obama administration.