Tue. Jan 18th, 2022


Lael Brainard, Joe Biden’s nominee for vice chairman of the Federal Reserve, will tell Congress that the fight against high inflation is the US Federal Reserve’s “most important task” in embracing the Fed’s pivot to tighter monetary policy.

“Inflation is too high, and working people across the country are worried about how far their paychecks will go,” Brainard, a Fed governor, said in prepared remarks issued before her confirmation hearing before the Senate Banking Committee Thursday.

“Our monetary policy is focused on getting inflation back to 2 percent while maintaining a recovery that includes everyone. This is our most important task, ”she added.

If confirmed by the Senate, Brainard, 60, would be second-in-command at the Fed after a steady rise in the ranks of U.S. economic policy-making, including serving as a senior Treasury official for international affairs under former President Barack Obama and nearly eight years on the Fed’s board.

The central bank is rapidly moving towards tighter monetary policy to a pivotal point late last year in its thinking on inflation and the risk it poses to economic recovery. During his confirmation hearing Tuesday, Fed Chairman Jay Powell warned high inflation was a “serious threat”To the labor market and the prospects of a long-term economic expansion.

Brainard is widely regarded as a dove over monetary policy, but her testimony suggests she is on board with a more aggressive approach to fighting inflation. During her opening statement, she will also quote her international experience to highlight her determination to halt excessive price increases.

“In some foreign countries, I have seen up close how high inflation hurts workers and families, especially the most vulnerable,” she would say.

The consumer price index rose at a 7 percent year-on-year rate last month, a step higher from the 6.8 percent rate recorded in November and the biggest jump since June 1982.

Fed officials already have their support indicated for three interest rate hikes next year, after accelerating the pace at which they shut down a major bond-buying stimulus program. The “lifting” of the Fed’s main policy rate is now widely expected in March, with a reduction in the $ 9tn balance sheet kicking off later in the year.

Brainard is expected to face difficult questions, especially from Republican lawmakers who are worried she will lead what Bill Hagerty, a Tennessee senator, described as an “activist bloc” of Biden officials that Powell would set aside and A democratic policy agenda would impose on the Fed.

In her remarks, Brainard sought to allay such concerns. “I am committed to the independent and non-partisan status of the Federal Reserve. “Once that is confirmed, I look forward to supporting President Powell in carrying out the responsibilities assigned to the Federal Reserve and to promoting transparent communication and accountability to you and the American people,” she said.

While Brainard is generally in line with Powell and other members of the Federal Open Market Committee on monetary policy issues, she has carved out a clear voice at the central bank on oversight issues.

During her tenure at the Fed, she took a stricter stance than her colleagues on how Wall Street should be policed, and more than 20 times voiced conflict over rule changes that would facilitate regulations on major financial institutions.

It earned her praise from progressive Democrats, who for months pushed the Biden administration to replace Powell with Brainard.

Her efforts to strengthen guidelines on how banks should serve underprivileged communities have also sharpened her reputation among members of Biden’s party, as well as her commitment to the Fed to more proactively include climate-related financial risks in its oversight.



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