The renewal sets the stage for the largest set of interest rate increases since the early 1980s (Getty)
second term by Jerome Powell on head US central bank The Senate fixed it for another four years on Thursday, in a move that paves the way for continued leadership of the Federal Reserve, as it struggles with a record high. swell In 40 years.
President Joe Biden was quick to welcome the House vote for Powell, who was nominated by the president himself, with 80 votes to 19, knowing that most of the rejectionists are Republicans, although a few Democrats joined them, including Robert Menendez and Elizabeth Warren.
BREAKING: In an 80-19 vote, the Senate confirmed Jerome Powell for a second four-year term as Federal Reserve chair, giving bipartisan backing to Powell’s high-stakes efforts to curb the highest inflation in four decades. https://t.co/sUNTREGf9p
— The Associated Press (@AP) May 12, 2022
Menendez justified his refusal that Powell had not done enough to promote diversity in the central bank’s leadership, while Warren said he had failed on banking regulation. However, the final vote was an endorsement of Powell’s handling of the crisis triggered by the coronavirus pandemic and the short-lived, but historic recession in 2020 that marked his first term.
The vote also represents a mandate for him to press ahead with what may be the largest set of interest rate increases since the early 1980s, when Paul Volcker led the Federal Reserve.
The board began raising the overnight lending rate in March, and last week raised it again by half a percentage point, the largest rate increase in 22 years.
Powell indicated, in a press conference, after that announcement that more increases of this size are likely to come in the next two meetings of the Board on monetary policy.
The vote was preceded by Treasury Secretary Janet Yellen’s statement that the central bank is able to reduce inflation without causing a recession, due to the strength of the labor market, low debt costs and the strength of the banking sector.
“All of these things indicate that the Federal Reserve has a way to bring down inflation without causing a recession, and I know it would be their goal to try and get that,” Yellen said, at a hearing of the House Financial Services Committee on Thursday.
The Federal Reserve recently raised the key interest rate by half a percentage point to range between 0.75% and 1%, as part of its efforts to contain the highest inflation rate recorded in the country in 40 years.
The Federal Reserve said, in a statement, that the Russian military attack on Ukraine and the coronavirus-related shutdowns in China were exacerbating inflation and logistical problems.
The US is witnessing a steady rise in prices, and the Federal Reserve’s monetary committee recently revised its economic outlook and significantly raised its inflation expectations.
One of the most effective tools available to the Federal Reserve is to raise interest rates to control demand, and thus slow inflation.