President Biden will renominate Jerome H. Powell, the Federal Reserve chair, to another four-year term — ensuring policy continuity at a moment of rapid inflation and vast economic uncertainty but potentially angering progressive Democrats who had been agitating for a change in leadership.

The much-awaited decision was a return to tradition in which the central bank’s top official is reappointed regardless of partisan identity — a norm bucked by former President Donald J. Trump, who appointed Mr. Powell instead of renominating Janet L. Yellen.

It reflected a general view by Mr. Biden and his top aides that Mr. Powell has done well in supporting the economy through the pandemic recession and its halting recovery. It is also a bet that Mr. Powell is the right leader to steer the Fed through an economically and political treacherous storm of price increases, which administration officials are convinced will dissipate next year.

“At this moment, of both enormous potential and enormous uncertainty for our economy we need stability and independence at the Federal Reserve,” Mr. Biden said during remarks at the White House. “When our country was hemorrhaging jobs last year, and there was panic in our financial markets, Jay’s steady and decisive leadership helped to stabilize markets and put our economy on track to a robust recovery.”

Mr. Biden will also nominate Lael Brainard, a governor whom many progressive groups had championed to replace Mr. Powell, to serve as the Fed’s vice chair. Renominating Mr. Powell — who won bipartisan support moments after the announcement — also spares the White House what might have been a bruising confirmation battle if the president had instead chosen Ms. Brainard, who has fewer Republican supporters in the Senate than Mr. Powell.

The stakes in the choice are unusually high.

Inflation has picked up sharply this year, with consumer prices increasing at the fastest pace in more than three decades in the year through October. The central bank is charged with keeping consumer prices stable while striving for maximum employment, and striking that balance could require difficult policy choices in the months ahead.

While taming inflation falls to the Fed, Mr. Biden has been suffering politically as prices rise for food, gas and airplane tickets. The president has repeatedly tried to reassure Americans that his economic policies will ultimately calm inflation, a message he is expected to repeat during remarks on Tuesday. His Fed decisions in recent weeks have become tangled in the politics of price increases, particularly as the president pushes Senate Democrats to coalesce around a $2.2 trillion climate change and social policy bill that Mr. Biden says will ease inflationary pressures in years to come but Republicans warn will stoke higher prices immediately.

Mr. Biden said he was certain that both Mr. Powell and Ms. Brainard would work to stabilize inflation and keep the economic recovery on track.

“We’re in a position to attack inflation from the position of strength, not weakness. In times like these we need steady, tested, principled leadership at the Fed,” he said.

Mr. Powell, who appeared alongside the president and Ms. Brainard at the White House, acknowledged the stakes. “We know that high inflation takes a toll on families, especially those less able to meet the higher costs of essentials like food, housing and transportation,” he said, adding that the Fed would “use our tools both to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.”

Mr. Powell’s reappointment suggests that the White House, which has a chance to fully reshape the Fed, is not aiming to completely overhaul the institution. The Biden administration already has one vacant governor role to fill, and two more seats will open early next year, giving Mr. Biden room to appoint at least three of seven governors. The president must also fill several leadership roles, including the Fed’s vice chair for supervision, a powerful position given its influence on bank oversight.

Mr. Biden has been under pressure from progressives and moderate Democrats to pick a diverse slate of leaders for the Fed who would prioritize tough bank regulation and do what they could to address climate change risks in the financial system.

Mr. Powell has come under criticism for being slow to address climate change and for backing measures that have chipped away at some post-crisis financial rules. In his statement on Monday, Mr. Biden said that he expected Mr. Powell, along with Ms. Brainard, to “address the economic risks posed by climate change and stay ahead of emerging risks in our financial system.”

Whether that will be enough to appease Mr. Powell’s critics remains to be seen. The Fed chair’s tenure has been criticized by some progressives, including Senator Elizabeth Warren of Massachusetts, who has called Mr. Powell “a dangerous man.” On Friday, Senator Sheldon Whitehouse of Rhode Island and Senator Jeff Merkley of Oregon released a statement opposing Mr. Powell’s reappointment.

In a statement on Monday, Mr. Whitehouse said that he was “disappointed” in Mr. Biden’s decision, saying that Mr. Powell had not taken climate change seriously enough.

“I sincerely hope that, if confirmed, Powell will reassess his past opposition to utilizing the Fed’s regulatory tools to minimize climate-related risks to the financial sector,” he said.

Other Democrats were more supportive, including Senator Sherrod Brown of Ohio, who praised Mr. Powell for helping steer the economy through the pandemic. Mr. Brown’s position is important given he chairs the Senate Banking Committee, which oversees the Fed and will handle the confirmation hearings for both Mr. Powell and Ms. Brainard.

Republicans, who supported Mr. Powell when he was nominated as chair by Mr. Trump, also lauded Mr. Biden’s decision to reappoint the chair.

Senator Patrick J. Toomey, Republican of Pennsylvania and the ranking member on the Senate Banking Committee, released a statement saying he would support Mr. Powell’s nomination, as did several other of his party’s senators.

Mr. Biden’s decision was influenced by a complicated economic moment. Inflation has jumped higher thanks to booming consumer demand, tangled supply lines and labor shortages that have helped to push the cost of used cars, couches and even food and rent higher. Yet millions of workers are missing from the labor market compared with before the pandemic. As a result, the Fed may be left balancing its two key goals as it charts its future policy path.

So far, the central bank has decided to slow its large bond-purchase program, a first step toward withdrawing monetary policy support that will leave it more nimble to raise interest rates next year if reigning in the economy becomes necessary.

The federal funds rate has been set to near-zero since March 2020, keeping many types of borrowing cheap and helping to fuel home and car purchases and other types of demand that in turn set the stage for strong hiring. Raising it could cool off growth and weaken inflation.

Yet trying to slow price gains would come at a cost. Workers are still trickling back after severe job losses at the onset of the pandemic, and the Fed is hoping to give the job market more space and time to heal. That’s especially true because continued waves of infection may be keeping many people from searching for work, either out of health concerns or because they lack child care.

Navigating the next steps will be no easy task.

Mr. Powell is a Republican who was first appointed by President Barack Obama as a Fed governor, then elevated to chair by Mr. Trump, whose decision to replace Ms. Yellen as Fed chair upended a longstanding tradition in which presidents reappoint Fed chairs of the opposite party who had done a good job.

Ahead of the White House’s decision, some economists had argued that it would be valuable to restart that pattern. Doing so, the logic went, would signal that the Fed is a technocratic body that sets prudent economic policy without taking into account political considerations.

Plus, Mr. Powell is often lauded for his track record as chair, which has seen the central bank pursuing full employment with vigor. The Fed guided the economy through the start of the coronavirus pandemic, unveiling a series of market rescue programs that kept Wall Street functioning and averted a financial disaster that could have cascaded through the economy.

But Mr. Powell had faced opposition from some progressive Democrats, first over his history of voting for changes that made financial regulation looser for banks, and later because of an ethics scandal that took place while he was overseeing the central bank. Two of the Fed’s 12 regional presidents made significant financial trades for their private accounts in 2020, when the Fed was actively rescuing many markets from pandemic fallout.

Mr. Powell has said that he defers to the person Congress has confirmed to the bank supervision role to set the agenda when it comes to regulatory matters. The Fed has unveiled new ethics rules since news of last year’s financial activity broke.

Presidential nominees to the Fed Board and Fed leadership positions must first pass through a Senate committee, then through a vote on the Senate floor.