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Jerome Powell: Proponent of a tighter monetary policy
Photo: Kevin Dietsch / Getty Images
A few hours ago, US President Joe Biden nominated the Chairman of the Federal Reserve (Fed), Jerome Powell, for a second term.
As a result, the euro has now reacted with lush losses.
In the afternoon, the common currency fell by about half a cent to 1.1236 US dollars after the change was made public.
That is the lowest level since mid-2020. The euro had already tended to be weak in the past few weeks.
Powell is seen as a proponent of a less loose monetary policy.
In the markets, it is now expected that the interest rate turnaround will be initiated in June 2022 under the leadership of the 68-year-old.
Then the key monetary policy rate could be raised by a quarter of a percentage point.
It is currently held in a range of zero to 0.25 percent.
Decision for Powell: "Hawkish Decision"
The Fed had only recently begun to move away from crisis mode: The billion-dollar economic aid is gradually being thrown out.
"Powell now has the difficult task of preparing the exit from the expansionary monetary policy without harming the economy and unsettling the financial markets," said the President of the German Institute for Economic Research, Marcel Fratzscher.
"Jerome Powell's nomination has been well received in the financial markets," commented Thomas Gitzel, VP Bank's chief economist, on the fall in the share price.
Under Powell, the Fed will continue to slow down bond purchases.
Gitzel expects a first rate hike in the coming year.
At the European Central Bank (ECB), however, no rate hikes are in sight.
This puts a strain on the euro.
In addition, there is the intensified corona situation in many countries in the euro zone.
However, the dollar appreciated against many major currencies.
This is probably also due to the fact that his deputy, Lael Brainard, who was considered his rival in the fight for the top of the Fed, could not prevail.
It had been favored by left-wing Democrats.
"The markets see this as a hawkish decision," commented the analysis company Capital Economics.
Monetary politicians with a less relaxed orientation are called hawks - and Powell takes a somewhat tighter line than Brainard.
The euro has recently recovered a little from its slump.
It was still $ 1.1252.
The troy ounce of gold was trading at $ 1,815 in London that afternoon.
That was $ 29 less than the day before.
apr / dpa / Reuters
