Fed Picks Pledge to Cool Inflation in Senate Nomination Hearing

Three Federal Reserve nominees — two of them current central bank policymakers — said tackling US inflation would be their top priority if confirmed to roles at the central bank.

(Bloomberg) — Three Federal Reserve nominees — two of them current central bank policymakers — said tackling US inflation would be their top priority if confirmed to roles at the central bank.

Governor Philip Jefferson, selected by President Joe Biden to be elevated to vice chair, said the economy faces multiple challenges, including inflation and banking-sector stress, in remarks to be delivered at his confirmation hearing Wednesday before the Senate Banking committee. 

“Inflation has started to abate, and I remain focused on returning it to our 2% target,” Jefferson said in the opening statement, which the Fed released Tuesday.

Adriana Kugler, nominated by Biden to fill a vacancy left by the departure of Lael Brainard earlier this year, echoed Jefferson’s remarks and said it’s important to return inflation to that level.

“If confirmed, I am deeply committed to setting monetary policy to reduce inflation and promote maximum employment, and to foster the resilience of the financial sector to support job creation and economic growth,” Kugler said in her opening statement, released by the Senate Banking committee. 

Kugler is Colombian-American and would become the Fed’s first Latina governor if confirmed.

Governor Lisa Cook, nominated to a new 14-year term, said she “will stay focused on inflation until our job is done.”

“The American economy is at a critical juncture, and it will be essential for the FOMC to act as needed to bring inflation back to our 2% inflation target,” Cook said in prepared remarks, referencing the policy-setting Federal Open Market Committee.

The Senate Banking committee will hold a joint hearing Wednesday to consider the nominations of Jefferson, Cook and Kugler, an economist and the US representative to the World Bank, to the Board of Governors. 

Inflation Focus

Fed policymakers have been focused on bringing inflation, which last year reached the highest rate in 40 years, back down to their 2% target. They’ve raised rates aggressively over the past 15 months, but left them unchanged in a range of 5% to 5.25% at their meeting last week in order to better assess how their tightening is impacting the economy.

Jefferson and Cook, who both joined the Fed last year, have voiced their commitment to the central bank’s determination in cooling prices in public remarks over the past 12 months.

While Jefferson is expected to garner votes from both political parties — he was approved for his current position with broad bipartisan support last year — Republicans may again question Cook’s qualifications and Kugler’s stance on fighting inflation.

Cook was ultimately confirmed along party lines last year, following a protracted confirmation fight, with only Democratic votes and Vice President Kamala Harris breaking the tie. 

Kugler holds a doctorate in economics from the University of California at Berkeley and served as chief economist at the Labor Department in President Barack Obama’s administration. That, coupled with her extensive labor-market research experience, may draw questions from Republicans about her commitment to the inflation side of the Fed’s dual mandate, which also includes maximum employment.

Democrats now have a slim majority in the Senate, so a tie-breaking vote from the vice president may not be needed.

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