U.S. Senate Confirms Jerome Powell’s Second Term As Fed Chair
Jerome Powell will serve another four-year term as the leader of the Federal Reserve. As chairman of the Federal Open Market Committee, the Fed’s monetary policymaking body, his job is to bring record inflation under control.
Fed Chair Powell has been confirmed by the Senate in a vote of 80-19 to serve a second term as the head of the U.S. central bank. The Senate’s approval comes amidst the highest inflation the U.S. has seen in four decades.
Former President Obama made Jerome Powell a governor of the Federal Reserve, then former President Trump nominated him as its chairman. Back then, Powell was approved by the Senate in an 84-13 vote. The Senate’s latest approval of Powell to serve another term means that Biden has appointed four of the seven governors of the Federal Reserve.
The current U.S. inflation rates are higher than 8% – at a level last seen in the 1980s. The Federal Reserve has increased interest rates in two consecutive FOMC meetings, the first time it has done so since 2006. Last week, it raised rates by 50-basis points (0.5%), the highest hike in the federal funds rate since 2000.
According to Powell, the Committee planned to increase rates by a half percentage point at each of the next two FOMC meetings. However, the situation is not carved in stone and remains dynamic and subject to adaptation. Powell doesn’t expect the Fed to increase rates faster than 0.5% at a time. He has highlighted the Fed’s view that the economy remains strong, but warned that it would be difficult to bring down inflation without it leading to recession.
Regardless, many of the Senate’s dissenting votes stemmed from dissatisfaction with the high inflation. According to Senator Richard Shelby, Powell should not be granted a second term, amid the record-breaking inflation.
The regional reserve banks of the Federal Reserve system are also in flux in terms of their leadership. The Boston Fed and Dallas Fed will both be represented under new leadership this summer, and the heads of both the Kansas City Fed and Chicago Fed are slated to retire soon.
