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Biden set to name Fed’s Brainard as top economic adviser

President Joe Biden is set to name Lael Brainard, vice-chair of the US Federal Reserve, to be his top economic adviser, bringing the central bank’s second-in-command to the White House to serve as one of Washington’s top financial policymakers.

Brainard will become the next director of the National Economic Council, the main White House job co-ordinating economic policy across the government, two people familiar with the matter said on Monday night. She will replace Brian Deese, who is departing the Biden administration after serving in the role for more than two years.

The White House and the Fed declined to comment. Brainard’s departure marks a rather abrupt exit from the US central bank’s leadership for the former Treasury under-secretary for international affairs. Although she has been on the board of governors at the Fed since 2014, she has only been vice-chair since May 2022.

Brainard’s move is part of a broader shake-up of Biden’s economic team in the wake of November’s midterm elections. The overhaul is also expected to involve the elevation of Jared Bernstein to the chair of the White House council of economic advisers, taking over from Cecilia Rouse. Janet Yellen, Treasury secretary, is expected to remain in her post.

In her years at the Fed, Brainard has been known for her dovish approach to monetary policy and her tougher stance on financial regulation, supporting more rigorous capital requirements for banks. In a speech at the University of Chicago’s business school last month, Brainard said “inflation remains high” and policy “will need to be sufficiently restrictive for some time” to get it down to the Fed’s 2 per cent target.

But she also expressed some confidence that the US might secure a “soft landing”, avoiding a recession — a view shared by the White House.

“It remains possible that a continued moderation in aggregate demand could facilitate continued easing in the labour market and reduction in inflation without a significant loss of employment,” she said.

Brainard has long been considered one of the most talented economic policymakers of her generation within the Democratic party. She had been considered a contender for Treasury secretary before Yellen was chosen and for chair of the US central bank before Biden decided to nominate Jay Powell to a second term.

Biden’s decision to appoint Brainard to lead the NEC was first reported by Bloomberg News.

Progressive Democrats have been sceptical of Brainard in the past, particularly because she was seen as sympathetic to more open trade and engagement with China while she worked at the Treasury department under former president Barack Obama. However, they have largely supported her approach at the Fed.

Brainard’s appointment comes at a political inflection point within the White House. With Republicans in control of the House of Representatives, Biden’s expansive economic legislative agenda is expected to grind to a halt.

But Brainard will be in charge of managing the White House’s response to expected fiscal brinkmanship congressional Republicans over the debt ceiling, and may have to help negotiate an agreement with Congress to avoid a default on US debt.

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