Jerome Powell Confirmed by Senate for a Second Term as Fed Chair

Federal Reserve Chair Jerome Powell testifies before the Senate Banking Committee in Washington, on March 3, 2022. (Tom Williams/Pool via Reuters)

The U.S Senate reconfirmed Jerome H. Powell as the Federal Reserve chairman for a second four-year term on May 12, highlighting its confidence in the central bank’s recent policy decisions at a time of 40-year high inflation and a shaken post-pandemic economy.

The Senate approved Powell by an 80–19 vote, with several Republicans and Democrats voting against his nomination.

Sen. Patrick Toomey (R-Penn.), the ranking Republican on the Senate Banking Committee, praised Powell in a statement.

“Chairman Powell’s leadership has helped spur economic growth while preserving the best capitalized banking system in American history,” said Toomey.

“Few institutions are more important to help steer our economy in the right direction and to fight inflation than the Fed,” said Senate Majority Leader Chuck Schumer (D-N.Y.).

Sen. Richard Shelby (R-Ala.) criticized the chairman for high inflation and posted on Twitter that “we should not reward failure.”

Sen. Robert Menendez (D-N.J.) wrote in a tweet that the central bank did not do enough to promote Latinos in its leadership.

“For this reason, I cannot in good conscience support him and will be voting ‘NO’ on his confirmation,” said Menendez.

Sen. Elizabeth Warren (D-Mass.) said Powell had fallen short on bank regulation.

Powell was first chosen as a Federal Reserve governor by former President Barack Obama in 2012, elevated to chairman by former President Donald Trump, and nominated for a second term as chairman by President Joe Biden late last year.

The chairman now has a mandate to manage the most aggressive attempt to raise interest rates since former chairman Paul Volcker led the Fed back in the 1980s.

The Fed began lifting its benchmark interest rate in March and raised it again on May 4 by half a percentage point, the largest rate increase in 22 years.

Powell hinted that more increases of that size will be made at the central bank’s policy meetings this year.

“Inflation is much too high, and we understand the hardship it is causing, and we’re moving expeditiously to bring it back down,” said Powell. “It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all.”

The central bank said in May that it will start culling its $9 trillion portfolio of Treasury holdings and other assets in June, to ease markets and augment the impact of its low-rate policies during the pandemic.

Powell will oversee the shift from an easy money policy to a severe jump in interest rates that will increase longer-term borrowing costs.

The Fed is responsible for stimulating the economy and keeping inflation down.

Inflation climbed to 8.3 percent in April 2022 compared to the previous year, the Bureau of Labor Statistics reported.

The Biden administration is currently backing Powell as the president has seen his approval ratings tumble with skyrocketing inflation, which is now running above an 8 percent annual rate.

Former Fed governor Sarah Bloom Raskin withdrew her name from consideration for vice chair of supervision due to controversy over her nomination to succeed Randal Quarles, who resigned at the end of 2021.

Instead, former Treasury official Michael Barr will take questions from the Senate Banking Committee on May 19, his first step in the confirmation process to be vice chair of supervision.

Lisa Cook and Philip Jefferson were recently successfully confirmed as governors, while Lael Brainard was confirmed several weeks ago as the central bank’s new vice chair.

After Powell, Biden has so far successfully appointed four of the Fed’s seven governors in Washington, all of whom pledged to fight the inflation crisis as their top priority.

Reuters contributed to this report.