President Biden is considering nominating Lisa Cook, an economist at Michigan State University, to fill an open seat on the Federal Reserve Board, people familiar with the matter tell Axios.

Why it matters: The appointment would be historic, since Cook would be the first Black woman to join the Fed. It also would reveal the new president's preferences for monetary policy and how he may reconstitute the Fed, including the chairmanship.

• Chairman Jerome Powell’s term is up in February 2022, but presidents typically announce a replacement, or whether to renominate the chair, the summer before the expiration. That would be this summer — plenty of time for the financial markets to adjust to the change.
• The White House declined comment and Cook did not respond to a request for comment.

The big picture: Under Powell, the Fed has assumed an extraordinary role in trying to contain the economic fallout from the coronavirus. It reduced the benchmark lending rate to zero and pumped trillions of dollars into the economy through asset purchases.

• Powell on Wednesday continued to warn about the challenges facing the economy and suggested the 6.3% unemployment rate “dramatically understated” the actual conditions in the labor market.
• Biden's economic advisers have insisted they're not concerned his $1.9 trillion stimulus package will lead to inflation, as Larry Summers, a former Democratic Treasury secretary, warned in an op-ed this week.

Details: Cook’s academic writing suggests she is a dove, meaning she’s less concerned about inflation and more focused on improving labor market conditions.

• She's also written about the broader effects of racial bias and how “discrimination inflicts a staggering cost on the entire economy.”
• Cook served as a senior economist at the Council of Economic Advisers under President Obama and was a member of Biden’s transition team.

Between the lines: President Trump repeatedly attacked the Fed’s independence, demanding it lower interest rates and insisting he had the authority to dismiss Powell, a controversial proposition that he ultimately never tested.

• Last week, Biden withdrew the name of Judy Shelton, Trump’s controversial Fed pick, whose nomination foundered in the Senate over her unorthodox views.

What we are watching: In addition to setting interest rates, the Fed also regulates financial institutions. That role expanded with the government's response to the financial crisis of 2008-09.

• Biden will have an opportunity to nominate a vice chair for supervision when the term of the post's current occupant, Randal Quarles, expires in October.
• He also will be able to replace Richard Clarida, the other vice chair, when his term ends in January 2022.
• Lael Brainard, a current Fed governor who Biden considered for Treasury secretary, could be elevated to either position.
• Cook also could be elevated to one of them, which would require a separate Senate confirmation vote.