The Senate on Thursday 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.
The 80-19 vote reflected broad support in Congress for the Fed’s drive to combat surging prices through a series of sharp interest rate hikes that could extend well into next year. The Fed’s goal is to slow borrowing and spending enough to ease the inflation pressures.
Since February, when his first term expired, Powell had been leading the central bank in a temporary capacity.
He faces a difficult and risky task in trying to quell inflation without weakening the economy so much as to cause a recession. The job market remains robust and has strengthened to a point that Powell has said is “too hot” and is contributing to an overheating economy.
Spiking prices across the economy have caused pain for millions of Americans whose wages aren’t keeping up with the cost of such necessities as food, gas and rent. And the prospect of steadily higher interest rates has unsettled the financial markets, with stock prices having tumbled for weeks.
Powell’s support Thursday in the Senate was roughly in line with what he received four years ago, after he was first nominated as Chair by President Donald Trump. At that time, the Senate voted 84-13 to confirm him.
Powell’s confirmation comes even as many economists have sharply criticized the Fed for waiting too long to respond to worsening inflation, making its task harder and riskier.
In the past, members of Congress often objected to higher interest rates out of fear that they would cause job losses. The chronically high inflation of the 1970s has been attributed, in part, to political pressure that led the Fed to forego steep rate hikes under Presidents Lyndon Johnson and Richard Nixon.
Powell himself endured harsh criticism by Trump when the Fed raised rates in 2017 and 2018 after the unemployment rate had reached a half-century low of 3.5%. Powell reversed some of those hikes in 2019, after the economy had slowed in the aftermath of Trump’s tariffs on Chinese imports.
This week, Biden said that while he would respect the Fed’s independence, he supported its efforts to raise borrowing rates, which have already caused the costs of mortgages, auto loans and business borrowing to surge.