Senate confirms Powell for 2nd term
WASHINGTON » The Senate on Thursday confirmed Jerome Powell for a second four-year term as Federal Reserve chair, giving bipartisan backing to Powell’s highstakes 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.
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.
In an interview with NPR’S “Marketplace” later Thursday, Powell acknowledged that the Fed’s ability to successfully slow the economy and reduce inflation without causing a recession — a so-called “soft landing” — depends on “factors that we don’t control,” such as Russia’s invasion of Ukraine and slowing growth in China.
That contrasts with previous, more-confident statements by Powell, including just last week when he said, “we have a good chance to have a soft or soft-ish landing.”
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.
To some degree, Powell’s support in Congress reflects the blame that most Republicans assign to President Joe Biden’s $1.9 trillion COVID relief package — rather than to the Fed’s ultra-low rates — for causing high inflation. Many economists, including those who have served in previous Democratic administrations, 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.
Prices first spiked a year ago, after Americans ramped up their spending once vaccines were administered and COVID restrictions began to decline. The surge in demand caught many businesses unprepared and short on supplies, causing prices for goods like cars, furniture and appliances to soar — if consumers could even find them.