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25.07.202104:34 Forex Analysis & Reviews: Jerome Powell may resign as early as January 2022

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Exchange Rates 25.07.2021 analysis

US stock markets continue to grow. Moreover, it is very difficult to say what are the reasons for its growth at this time. Whether for the most banal reason – there is more money in the US economy, so this excess money settles on the stock market. Whether for deeper fundamental reasons, such as the rapid recovery of the American economy. One way or another, the NASDAQ and S&P 500 indices on Friday did not just close with an increase. They updated their absolute highs. By the way, the macroeconomic statistics were very weak this week. On Friday, more or less significant business activity indices were published, which were not unequivocally in favor of the dollar or the American economy. It turned out that business activity in the manufacturing sector increased from 62.1 to 63.1 points in July, but at the same time, it decreased from 64.6 to 59.8 points in the service sector.

In addition, American journalists began to wonder who will take the place of Jerome Powell after his term of office ends? Recall that in January next year, Powell may leave his post if the Joe Biden administration does not decide to extend his contract for a second term. At this time, there is little chance that Powell will remain at the helm of the Fed. It is noted that there is no direct conflict between Biden and Powell, but Biden is a Democrat, and Powell is a Republican. Thus, Biden will probably want to see "his person" at the head of the central bank.

Moreover, one way or another, the president wants to have at least some influence on the Fed's monetary policy. After all, the Fed is not directly subject to the president under American laws. It is independent. Therefore, at least some influence on its activities can be exerted if the president appoints the person. Of course, this does not guarantee the result. One has only to remember how Donald Trump clashed with Powell, although they are both from the same party, and it was Trump who nominated Powell for this post in 2017. Also, American economists have already suggested who can replace Powell at the head of the Fed. It can be Lael Brainard, who has been on the Fed's monetary committee since 2014 and is famous for the softest position among all committee members. Experts note that if Brainard becomes the head of the Fed, the organization can take the most "dovish" position of all possible for a long time.

Eseguito da Paolo Greco
Esperto analista di InstaForex
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