Powell walks high wire as Fed plans to ease support for Biden's economy
4 min read
Central bank chief seeks to avoid market turmoil as president weighs tapping him for a second term.
"With vaccinations rising, schools reopening, and enhanced unemployment benefits ending, some factors that may be holding back job seekers are likely fading," Powell said. "While the Delta variant presents a near-term risk, the prospects are good for continued progress toward maximum employment." Powell made clear that even if the Fed begins to slow its asset purchases, that doesn't mean it's close to raising interest rates, saying there was "much ground to cover" in the labor market recovery. "It's best for Fed policy for him to be as forthright as possible without scaring anyone, which also happens to be what's best for him politically," said Diane Swonk, chief economist at Grant Thornton, said before the speech. Biden's presidency is riding on his pledge to both defeat the virus and restore the economy to its pre-pandemic strength, and Powell has provided crucial backup for the president in both his words and multitrillion-dollar infusion of aid to the markets. Any misstep at the conference — which has served as the venue for some of the Fed's most sweeping policy changes in the past — would have come at a particularly sensitive moment for the Fed chair, with the decision on whether to reappoint him expected to be announced as early as next month. The bond-buying process is designed to lower long-term interest rates, making it cheaper to borrow and encouraging investors to take more risks, which ideally boosts overall growth. Powell has faced criticism from some progressive groups, who have been vocal in pushing the central bank to not move aggressively to remove support before the benefits of the recovery have been felt more broadly. The Fed Up Campaign, a coalition of labor and community…