[ad_1]
Three current and prospective members of the Federal Reserve’s interest-rate setting panel have all pledged to win the battle against high inflation ahead of their Senate nomination hearings.
The Senate on Wednesday is set to consider the nomination of Adriana Kugler for an open spot on the Fed’s seven-member Board of Governors. She would be the first American of Hispanic heritage to become a member of the Fed’s inner circle.
“High inflation hurts workers and businesses alike,” she said in prepared testimony released Tuesday evening. “And I believe that it is important to bring inflation down to the Fed’s 2% target in order to set a strong foundation to build an economy that supports all Americans.”
The Senate Banking Committee will also consider the appointment of Fed Gov. Philip Jefferson to fill the vacant position of vice chairman. Fed Gov. Lisa Cook has been nominated for a full 14-year term as well.
The Fed is facing one of its biggest challenges in decades. Inflation soared to a 40-year high of 9% last year, in part due to the central bank’s easy money strategy during the pandemic.
Now the Fed is trying to get inflation back down to pre-crisis levels of 2% or less, ideally without triggering a recession. Inflation is still running too high at 4% to 5%, however, and the Fed might have to raise interest rates even more.
Higher rates slow the economy by raising the cost of borrowing. The Fed has jacked up its key short-term rate to a top end of 5.25% from nearly zero 14 months ago, and the higher it raises rates, the greater the odds of recession.
The Fed last week voted to skip or pause a rate hike in June to see how the economy responds to the prior rate hikes, but top officials signaled they were ready to nudge rates higher unless inflation declines more rapidly.
The trio of Fed nominees represents an effort by the Biden administration to diversify the board and elevate fresh voices in the oft-insular world of central banking.
The Colombian-born Kugler is a top official at the World Bank and previously served in the U.S. Treasury Department during Barack Obama’s presidency. She is also an economics professor at George Washington University.
“As a first-generation American and daughter of Colombian immigrants, I am fortunate to have lived the American Dream after having seen poverty and adversity,” she said.
“I have had educational and economic opportunities that my parents and grandparents would have never had, and I have benefitted from social mobility only possible in our dynamic U.S. economy.”
Jefferson, who joined the board last year, would fill the No. 2 job at the Fed that has been vacant since February. He would be the second Black American to hold that post.
Cook, also a Black American, has been finishing out the term of a previous Fed board member who resigned. She also was added to Fed board in 2022.
“Elevated inflation is a grave threat to sustaining the expansion of the American economy,” Cook said. “The American economy is at a critical juncture, and it will be essential for the [Fed] to act as needed to bring inflation back to our 2% inflation target.”
[ad_2]
Source link
