United States Treasury Secretary Janet Yellen has told senior White House advisers that she supports reappointing Jerome Powell as Federal Reserve chair, a move that greatly increases his chance for a second term.

US President Joe Biden hasn’t made a decision yet, but keeping someone viewed by Wall Street as a trusted policy maker in charge of the world’s most powerful central bank would send a signal of continuity as the US economy recovers from the pandemic.

With Mr Powell’s four-year term ending in February, the White House has been casting a wide net for possible candidates. Advisers have been examining the public speeches and comments of potential contenders to consider, paying special attention to views on the labour market.

But uncertainty over the economic impact of a surge in coronavirus cases, fuelled by the Delta variant, may trigger more caution about changing the leadership at the Federal Reserve.

Ms Yellen’s backing gives Mr Powell an enormous boost. Her almost two decades of experience at ‘the Fed’, including four years at its helm, make her counsel to Mr Biden valuable.

She also has experience working directly with Mr Powell, who served as a governor at the Fed from 2012 until being elevated to the chair in 2018 when then-President Donald Trump passed over Ms Yellen for her own second term.

For Mr Powell and his backers, including Republican lawmakers and many on Wall Street who view him as a steady pair of hands, Ms Yellen’s support comes at an important time.

Mr Powell will deliver a much-anticipated speech at Friday’s annual Jackson Hole symposium, possibly signalling when and how the central bank is likely to begin withdrawing some of its extraordinary support for the US economy.

Keeping a Republican Fed chair could also help the White House blunt Republican efforts to use rising prices to attack Mr Biden and his spending plans. Mr Powell has so far agreed with the White House’s position that the recent jump in US inflation is transitory.

Critics, including Republicans and even some Democrats, have said the Fed is at risk of letting inflation get out of control for the first time in more than 30 years. They have urged Mr Powell to begin pulling back on the Fed’s massive bond purchases, which help stimulate the economy by suppressing long-term borrowing costs.

Mr Powell, however, hasn’t wavered. While promising to monitor price movements closely, he has stuck by the prediction of many economists, including Fed staff, that price spikes associated with the pandemic will fade over time and the Fed should be patient in withdrawing support from a still-vulnerable economy.

The virus surge in the US is still fuelling uncertainty as the Fed plots its monetary policy path. While interest rates are expected to remain near zero into next year, several Fed officials have indicated eagerness to begin reducing the size of monthly bond purchases.

Mr Powell has promised to avoid surprising markets with that eventual move.