Joe Biden names Fed’s Lael Brainard as top economic advisor

President Joe Biden has named Federal Reserve Vice-Chairman Lael Brainard as his chief economic adviser and brought in the Fed’s deputy to the White House to serve as one of Washington’s key fiscal leaders.

As the next director of the National Economic Council, the White House’s main job of coordinating economic policy across the administration, Brainard will replace Brian Deese, who is leaving the Biden administration after serving in that role for more than two years.

Brainard’s departure marks a rather abrupt departure from the Federal Reserve Board for the former Treasury Department’s undersecretary for international affairs. Although she has been on the Fed’s board of governors since 2014, she has only been vice chair since May 2022.

Brainard’s move is part of a broader restructuring of Biden’s economic team following November’s midterm elections. The overhaul also included the elevation of Jared Bernstein to chair the White House Council of Economic Advisers, replacing Cecilia Rouse. Janet Yellen, Treasury Secretary, is expected to remain in her post.

“Lael, one of the country’s leading macroeconomists, brings an extraordinary depth of domestic and international economics expertise,” Biden said of Brainard, citing her career in the Clinton White House, Barack Obama’s Treasury Department, and then US headquarters Bank. “She is a trusted veteran in all of our business institutions and understands how business impacts people on a daily basis.”

During her years at the Fed, Brainard was known for her dovish approach to monetary policy and her tougher stance on financial regulation, which supported tighter capital requirements for banks.

In a speech at the University of Chicago Business School last month, Brainard said “inflation remains high” and that policies “have to be sufficiently restrictive for some time” to bring them down to the Fed’s 2 percent target.

But she also expressed confidence that the US could achieve a “soft landing” and avoid a recession – a view shared by the White House.

“It remains possible that a sustained weakening of aggregate demand could allow further easing in the labor market and a fall in inflation without a significant loss of employment,” she said.

Brainard has long been recognized within the Democratic Party as one of the most gifted economic leaders of her generation. She was considered a candidate for the position of Treasury Secretary before Yellen was elected and for Federal Reserve Chair before Biden decided to nominate Jay Powell for a second term.

Progressive Democrats have been skeptical of Brainard in the past, particularly because she was seen as sympathetic to more open trade and engagement with China during her tenure at the Treasury Department under former President Barack Obama. However, they have largely supported their approach to the Fed.

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

But Brainard will be responsible for managing the White House’s response to expected fiscal brinkmanship from Congressional Republicans over the debt ceiling, and may need to help negotiate a deal with Congress to avoid a US debt default.

Brainard’s move to the White House gives Biden a key vacancy to fill at the Fed at a time when it’s still battling inflation and raising interest rates to bring consumer inflation closer to its 2 percent target.

Biden also made other changes on Tuesday. Bharat Ramamurti, the NEC’s deputy director, will serve as “adviser on strategic business communications,” while Heather Boushey, a member of the CEA, will serve as chief economist to the Invest in America cabinet. Joelle Gamble, the Department of Labor’s chief economist, will become deputy director of the NEC.