Senate votes to keep Powell as Fed chief

WASHINGTON — The Senate on Thursday confirmed Jerome H. 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 “unsustainably hot” and contributing to an overheating economy.

Surging 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 nominated as chair by then-President Trump. At that time, the Senate voted 84 to 13 to confirm him.

To some degree, Powell’s support in Congress reflects the blame that most Republicans assign to President Biden’s $1.9-trillion COVID relief package — rather than to the Fed’s ultra-low rates — for causing high inflation. Many economists agree that Biden’s legislation played a role in accelerating prices.

Powell’s confirmation comes as many economists have sharply criticized the Fed for waiting too long to respond to worsening inflation, making its task harder and riskier.

For months, Powell repeated his view that inflation was merely “transitory” and would soon ease as supply bottlenecks were resolved. The Fed continued buying Treasury and mortgage bonds until March, when prices had soared 8.5% from a year earlier. The bond purchases were intended to keep long-term loan rates down. It was only two months ago that the central bank raised its benchmark rate from near zero to a range of 0.25% to 0.5%.

“Hindsight says we should have moved earlier,” Powell acknowledged during a Senate hearing in early March.

The Senate has already confirmed three of Biden’s other picks for the Fed’s Board of Governors: Lael Brainard, who is now vice chair, Lisa Cook and Philip Jefferson. All three will vote on the central bank’s interest rate decisions and financial regulatory policies.

Cook and Jefferson are both Black, meaning that the Fed’s board now has two Black members for the first time in its 108-year history.