The US Senate confirmed Jerome Powell for a second term as chairman of the Federal Reserve on Thursday, as the central bank intensifies its fight against rising inflation.
The vote occurred as inflation soared to a 40-year high, fuelled by the turmoil in Ukraine and Russian sanctions, as well as China’s Covid-19 limitations, which have stoked fears that global supply shortages may intensify.
The Fed chair has stated that his major goal is to get inflation under control, although he has conceded that this will be a difficult task.
President Joe Biden, whose popularity has been harmed by rising inflation and record gasoline costs, has often stated that the Federal Reserve should be in charge of dealing with the problem.
“I am pleased to see the Senate take a step forward on my agenda to get inflation under control by confirming my nominees to the Fed,” he said in a statement after the vote.
Powell, who joined the Fed board in 2012, oversaw the central bank when it dropped the benchmark interest rate to zero and poured money into the banking system to prevent a serious downturn in the world’s largest economy at the onset of the epidemic in March 2020.
He is now in charge of initiatives to reduce price pressures on American families.
The Federal Reserve raised interest rates for the first time since 2000 last week and said more hikes are likely in the coming months.
Powell and the Fed face a difficult task in lowering inflation without plunging the United States into recession.
While he has expressed confidence the economy is strong enough to withstand the tighter monetary policy, Powell said it will be challenging amid the unprecedented global shocks and “may actually depend on factors that we don’t control.”
In an interview with Marketplace on Thursday, he renewed his warning that “the process of getting inflation down to two percent will also include some pain.”
But “the most painful thing would be if we were to fail to deal with it and inflation were to get entrenched in the economy at high levels.”
– Delayed confirmation – Powell, a Republican, enjoyed broad bipartisan support in the 80-19 vote — but also bipartisan opposition. Six Democrats voted against him, including progressive senators Bernie Sanders and Elizabeth Warren, who established the Consumer Financial Protection Bureau.
“Working families should not bear the cost of fighting inflation,” Warren tweeted after the vote. “As Fed Chair, Jerome Powell must focus on strengthening our economy without slamming the brakes on its growth or hurting families already struggling with higher prices.”
Powell remained at the helm of the Federal Reserve after his initial four-year tenure ended on February 4.
His confirmation was held up by the fight to appoint Lisa Cook to the Federal Reserve Board of Governors, the first Black woman to hold the position, who was approved on Tuesday with just Democratic votes.
Philip Jefferson was also confirmed to the board by the Senate late Wednesday, making it the first time the institution has had more than one Black governor.
With the recent additions, the Fed board will be one governor short of having all seven members.
Biden asked the Senate to confirm his final candidate for a vice chair for supervision, Michael Barr, in his statement.
The US president’s first pick for the role of top Fed banking cop, Sarah Bloom Raskin, withdrew her name from consideration in March when it became clear she would not have sufficient support due to opposition from Republicans and from a key Democratic lawmaker over her stance on climate change issues in banking supervision.
Cook, an economics and international relations professor at Michigan State University, and Jefferson, a Davidson College professor, have both studied labor market disparity.
Powell has emphasized the need of ensuring that disadvantaged groups have access to economic opportunities, a remarkable shift in focus in an economy where Black workers have far higher unemployment rates than other racial groups.
Jefferson is only the fourth African-American to hold the position of Fed governor.