Lael Brainard, a Federal Reserve governor whom President Biden named the new central bank vice chair, told lawmakers the central bank would use its policies to tame inflation in prepared remarks for her confirmation hearing on Thursday. .
Ms. Brainard, who faces a check before the Senate Banking Committee, is expected to garner considerable support among Democrats and could garner Republican votes, although the number is unclear at this stage.
His appointment — and his new role at the Fed if confirmed by the Senate — comes at a tough economic time. Although unemployment is falling rapidly, inflation has taken off, with a report released on Wednesday showing a key price index rose in December at the fastest rate since 1982.
“We are seeing the strongest rebound in growth and the decline in unemployment of any recovery in the past five decades,” Ms. Brainard said. “But inflation is too high and workers across the country are worried about how high their paychecks will go.”
Ms Brainard also told lawmakers the Fed’s policies are ‘focused on getting inflation down to 2% while maintaining a recovery that includes everyone’, calling it the bank’s ‘most important task’ central.
After nearly two years of supporting a virus-stricken economy by keeping interest rates low and buying government-backed debt, Fed officials have begun scaling back their large bond purchases at the end of last year. This program is expected to end in March. Officials have signaled in recent weeks that they also plan to raise interest rates to make borrowing more expensive, slow demand and help cool the economy.
Markets increasingly expect four rate hikes in 2022, which would put the Fed’s short-term policy interest rate slightly above 1%.
“Today the economy is making welcome progress, but the pandemic continues to pose challenges,” Ms. Brainard said. “Our priority is to protect the gains we have made and support a full recovery.”
Ms. Brainard has been with the Fed since 2014, spanning the Obama, Trump and Biden administrations. Prior to that, she was a senior international civil servant in the Treasury Department. An economist and Democrat, she had been considered a potential candidate for Treasury Secretary or Fed Chair under the Biden administration.
She has a good working relationship with Jerome H. Powell, the Fed chairman, whom Mr. Biden has reappointed for a second term. She used her prepared statement to emphasize that she has worked for many administrations in Washington — Democrats and Republicans — while pledging to take seriously the Fed’s mission to fight inflation and its independence from inflation. -live partisan squabbles.
“I will bring a thoughtful and independent voice to our deliberations,” she said.