Jared Bernstein, a member of the White House Council of Economic Advisors, joins Yahoo Finance Live to discuss President Biden's decisions to renominate Fed Chair Jerome Powell for a 4-year term and choose Lael Brainard as Fed Vice Chair.

Video Transcript

- Welcome back to "Yahoo Finance Live." We are continuing to see financials up broadly tick higher in the session on the back of the White House announcing that the president will, in fact, renominate current Fed Chair, Jerome Powell, for a second term. We've also seen bond yields push higher on the back of that news.

The president is expected to make a formal announcement at 1:20 PM Eastern this afternoon. We, of course, going to bring that to you live. Let's bring in Jared Bernstein. He's White House Council of Economic Advisors Member. And Jared, it's good to talk to you today. We now know the president met with both Jay Powell as well as Lael Brainard early on this month. Talk to me through the president's thinking. Why he thought, ultimately, Jerome Powell was the one that he wanted to lead the Fed through the next four years?

JARED BERNSTEIN: I think that he's seen the kind of work that Jerome Powell has done as chair. The extent to which he has managed the Fed's mandate in such a way that's given increasing employment opportunities, not just to the aggregate labor force writ large, but to groups that have long been left behind, something very important to Chair Powell and to President Biden. And I think when he thought about continuity, independence, and a Federal Reserve that would implement the kind of economic policy that we associate with Joe Biden, providing opportunities for lower and middle income people and making sure Wall Street is amply regulated, he decided that Jerome Powell was the right man for the job.

- Yeah. Mr. Berstein, I mean too, when you look at the way that Chair Powell was able to navigate the pandemic, of course, something no one saw it coming, the stability there of just sticking with the guy who's already been able to manage everything that we've seen. I mean, how big of a factor was that in just sticking with the status quo, given kind of the uncertainty that I'm sure President Biden might want to not touch in the recovery?

JARED BERNSTEIN: Well, certainly the performance that Chair Powell had made through the pandemic was important. Remember, we've had some serious problems with the Treasury market at one point, and Powell intervened quickly and forcefully. But Lael Brainard also been a long term highly accomplished economist on the Federal Reserve Board. And her work both on employment, again, a full employment mandate that reaches people in places that have been left behind, and her work on regulatory issues. She's been really doing some very important interventions on the Fed's macroprudential side of the equation. Spoke to making sure that, as Vise Chairman, she could continue to have probably an even broader input in those areas.

- And, Jared, specifically when you look at the next four years, I mean, there's a full plate already for the Fed Chair. Obviously, inflationary pressures are building up, concerns around labor shortage as well. When you look at where things stand today, we've gotten some reports, at least, from "Wall Street Journal" that supply chains could potentially be easing. We've seen oil prices pull back just a bit.

Where do you think we are? When you think about the price pressures that have been building, are we starting to see a bit of a pullback or is this still in the thick of things, given where we are in the pandemic?

JARED BERNSTEIN: Yeah. No, it's an important question. And I think that any pullback, it's sort of both and. Any pullback has to be viewed in the context of the ongoing pandemic. COVID is still playing a role in our economy, and the economy responds very quickly to it. And, by the way, since we're talking about the Federal Reserve, both Powell and Brainard have been very clear about this point. They've been careful not to try to, kind of, over intervene in terms of the inflationary story and recognizing that pandemic induced supply chain snarl-ups have played such an important role here.

But they've always done such, I think both of them, such a good job in their speeches and their commentary in their reports from the FOMC meetings in balancing those pressures. So, I think President Biden was taking all of that into account when he made these nominations.

- At the same time, though, we have seen inflation worries among consumers continue to rise here. And we had a prior guest just talking about how you've got a dove and a dove here in Powell and Brainerd. And when you talk about, maybe, some of the fears there on the consumer front. Obviously, the transitory debate has had a lot of pushback from a lot of consumers out there. I mean, what do you see in terms of the timeline to get back to normal, given kind of all the emphasis that President Biden and administrations put behind fixing the supply chain issue?

JARED BERNSTEIN: Well, I think President Biden, our team, our supply side task force team, of which I'm a member, but also Chair Powell and, hopefully, once she is approved, Vise Chair Brainard, have told the same story about this, which is one that I think is very much confirmed by the facts on the ground as we understand them which is that the inflation is coming from supply chain snarl-ups that are closely related to the pandemic.

And as the pandemic fades, so should the excess demand for goods and the impact of that excess demand in the ports and the supply chain re-normalize. That would take down some of the supply chain pressures. And virtually, every forecast I've seen, including the Fed's, has inflation normalizing to rates were more familiar with by the second half of next year.

So that's the ongoing forecast. I think what the Fed has shown and both comments from Powell and Brainard have shown is that they're watching that scenario much as I described it. They're taking the temperature of the supply chains, they're watching the pressures from wages, they're watching the pressures from consumer demand and this good service and balance.

So, I think they've been quite clear and consistent in their story. And, again, it is the modal forecast among everyone who's looking at this.

- And finally, Jared, climate change increasingly an important topic when it comes to the central bank. You've already got a number of financial regulators, including the SEC looking at reporting rules around the climate risk. What do you see as the central bank's role in tackling this crisis?

JARED BERNSTEIN: I think it's a role that you've already seen Chair Powell take. He's made important steps in putting climate change at the very heart of policymaking decisions. He certainly has their team of many hundreds of PhD economists working on the impact of climate change on the macro economy.

And during his conversations with the president about his priorities, Chair Powell reiterated that he continued to make this a top priority and even accelerate the Fed's efforts to address and mitigate these risks in context with his views as how that fits into monetary policy.

- Jared Bernstein, White House Council of Economic Advisors Member. It's great to talk to you today. Really appreciate the time.