France Press agency , Posted on Friday, May 13, 2022 at 00:25
US Central Bank President Jerome Powell kicked off a second term on Thursday: The Senate voted for Joe Biden at a time when the institution is battling inflation with the aim of not affecting economic growth.
The Senate plenary, as expected, decided in favor of Jay Powell by 80 to 19.
This 69-year-old lawyer and former banker, who headed the Federal Reserve (Fed) for four more years, will have to slow inflation, whose institution expected neither activism nor perseverance. But it will have to play hard, so as not to slow down the economy or overburden employment.
“The Federal Reserve plays a key role in fighting inflation,” Joe Biden commented in a press release.
So far, Jerome Powell has been reassuring that the monetary institution has the “tools” to make it happen.
But he warned on Thursday that controlling inflation “will not come without pain,” although “the most painful thing will be…if inflation remains entrenched in the economy at high levels,” he said. National Public Radio’s daily public radio business program.
Some senators also considered it against him because he did not see such a staggering and permanent rise in prices coming. Like Republican Richard Shelby, who voted against his reappointment because, to him, “Powell and the rest of the Federal Reserve have failed the American people.”
Democrat Bob Menendez also voted against a second term, but for other reasons: “Under President Powell’s leadership, the Federal Reserve continues to miss critical opportunities to appoint Latinos to the highest levels of its leadership.”
– Climate risk –
Governor of the Federal Reserve since 2012, Jerome Powell was appointed chairman of the institution in 2018 by Donald Trump, who later caused his outrage.
He succeeded Janet Yellen, who has since become Joe Biden’s Treasury Secretary.
This Republican, considered consensual, had assured during his appointment in November that the Fed would act so that inflation did not “take root”. But the price curve has continued upward since then.
Another priority is to combat the “evolving risks associated with climate change”. Left-wing Democrats called Joe Biden to pick someone else, and judge his actions in terms of taking climate change into account.
Since arriving in the White House in January 2021, the president has managed to reshuffle the Federal Reserve’s Monetary Committee, with five positions held.
Lyle Brainard, who was the only Democratic governor, became vice president after being confirmed on April 26 (52 votes to 43).
– Diversify conservatives –
The US president also wanted to diversify the powerful establishment, by bringing in two black economists as conservatives.
Thus Lisa Cook became the first black woman to hold this position, despite opposition from Republicans. Equality of votes in the Senate between the two camps would have required the Vice President of the United States, Kamala Harris, to vote for a narrow majority (51-50).
The appointment of Philip Jefferson was confirmed Wednesday (91-7).
Joe Biden welcomed the arrival of “these highly qualified members of the Board of Governors” to the Federal Reserve.
The Senate now has to decide whether to appoint Michael Barr to the position of vice president for banking regulation, after Sarah Blum Raskin, who was initially chosen, gave in due to a lack of sufficient support. It should be heard May 19 by the Senate Banking Committee.
The Fed, since March, has raised its key rates twice, to fight inflation at its highest levels in 40 years, and has warned that several more increases are expected by the end of the year.
Economically, the appointment of the head of the Central Bank is one of the most important decisions in the term of the President of the United States.
The Federal Reserve, the most powerful central bank in the world, decides the monetary policy of the country. Monitors and regulates the financial sector. Its decisions can either boost or slow down US economic activity by setting the cost of credit, affecting the dollar and thus all financial markets.