WASHINGTON (Reuters) -The U.S. Senate on Thursday is set to decide whether to give Jerome Powell a second term as head of the Federal Reserve, a vote that will likely confirm his role as the most influential American economic policymaker at a moment when the central bank is being tested by the highest inflation in a generation.
A final vote on his appointment to a second four-year term by President Joe Biden is scheduled for the afternoon, and he is expected to gain confirmation with bi-partisan backing.
The Senate vote will amount not only to an endorsement of his handling of the crisis triggered by the COVID-19 pandemic and the short but historically deep 2020 recession that marked his first term, but also for the sharp rises in interest rates the Fed is using to fight the surge in inflation.
The Fed began lifting rates in March and last week raised them again, by half a percentage point – the largest rate increase in 22 years. Powell signaled at a news conference after that announcement that more increases of that size are likely at the next couple of Fed policy meetings.
The central bank also announced that next month it will start culling its $9 trillion portfolio of Treasury bonds and other assets accumulated to smooth markets and augment the impact of rate cuts made during the pandemic.
Powell, who has been on the Fed’s Board of Governors since 2012, was first appointed to head the central bank by Donald Trump, who soon soured on him for a series of rate hikes that irked the former Republican president. Trump even contemplated trying to oust Powell, but both Republicans and Democrats rallied to his defense and the Fed chief won wide praise for defending the central bank’s independence through the tumult.
Biden has been more hands off with the Fed, but the Democratic president has seen his approval ratings slide on the back of the rise in inflation, which is still running above an 8% annual rate. Biden recently reminded Americans that it is primarily the Fed’s job to tackle inflation, though he has stopped short of agitating for any particular action by the central bank.
LATEST FED CONFIRMATION
Powell’s confirmation, roughly six months after his renomination, is the fourth recently won by a slate of Biden appointees to the Fed’s seven-member board, though the path has not been easy for all of them.
On Wednesday, the Senate confirmed Davidson College economist Philip Jefferson by a wide margin, but on Tuesday a tie-breaking vote cast by Vice President Kamala Harris was required to confirm Michigan State University economist Lisa Cook, who becomes the first Black woman to sit on the Fed board.
Jefferson is the fourth Black man to be a member of the board, and two Black Fed governors have never before served simultaneously.
Fed Governor Lael Brainard was confirmed several weeks ago as the central bank’s new vice chair, Powell’s top lieutenant.
One key vacancy remains, however: The vice chair for supervision, open since the departure of Randal Quarles around the end of last year.
Earlier this month, Biden said he would nominate former Treasury official Michael Barr for the job, which serves as the country’s top banking regulator. Biden’s initial pick for the job, Sarah Bloom Raskin, withdrew her name after opposition from Republicans and one Democrat denied her a path to confirmation.
(Reporting by Tim Ahmann, Susan Heavey and Ann Saphir; Writing by Dan Burns and Paul Simao)