President Biden is facing pressure from within his own party to remove Jerome Powell as Federal Reserve chair.
The White House has not said if the president wants to keep Jerome Powell at the helm of the American central bank. However, many analysts say something needs to change, as inflation remains a big problem. On Friday, economic uncertainty led to down day for S&P 500, its longest losing streak since February.
“We’re starting to see a lot of wage push, which would indicate we could get into a spiral: Wages go up, prices go up, wages go up, prices go up. He needs to start taking this seriously,” retired business professor and economist Peter Morici said.
He says Powell risks his own legacy if he continues to support easy-money policies that could lead to a recession or stagflation.
“That is reasonably high inflation, 5 or 6 percent a year, coupled with high unemployment, 5 or 6 percent a year. The inflationary surges we have been seeing are not transitory,” Morici explained. “Many of the problems are not likely to go away for a year or two.”
Morici says whether it's Powell at the helm, or someone else, the Fed should move quickly to taper purchases of treasury and mortgage-backed securities.