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Saturday, May 28, 2022

The Senate confirmed Jerome Powell for a second term as head of the Federal Reserve.

Latest NewsThe Senate confirmed Jerome Powell for a second term as head of the Federal Reserve.

Jerome Powell will continue to lead the Federal Reserve for at least another four years. The United States Senate has finally given mandatory approval to renew his mandate. Powell was first nominated by previous President Donald Trump and confirmed by current Joe Biden.

To his credit, Powell has managed to prevent the pandemic from paralyzing US finances and flooding the economy with liquidity. He is in debt with the highest inflation in four years, although it is influenced by external factors. Keeping prices down without triggering a recession is his task for this second term.

The Fed president has been in office since February, despite Biden’s proposed succession back in November as his ratification has not yet been put to a vote. In plenary session, he received an overwhelming majority of 80–19 votes in favor.

That same week, the Senate ratified the appointment of Fox Cook, the Fed’s first black adviser, by a decisive vote of Vice President Kamala Harris, and gave the green light to the appointment of Philip Jefferson, also an African-American. , the fourth black person to serve on the Fed’s leadership and the first to do so since 2006. At the same time, the Fed’s advice, which was at least, is almost completed again. Both were nominated by Biden, as was Michael Barr, who will appear before the Senate next week.

The Board of Directors has given the Federal Reserve a so-called double challenge: to keep as much employment as possible while maintaining price stability (although there is a third, less important request for reasonable long-term interest rates). Employment is close to a record high, but inflation is skyrocketing. It stood at 8.5% year-on-year in March, its highest in four decades, and only dropped to 8.3% in April.

The rise in prices is partly due to bottlenecks in the economic recovery after the pandemic, as well as to the energy and food crisis caused by the war in Ukraine. But also with the expansive monetary policy adopted by the Federal Reserve to successfully combat the economic crisis caused by the coronavirus.

He thoroughly knows all sides of the coin.


The Fed began raising interest rates at its March meeting. It accelerated this month with a half-point gain, the highest in 22 years, and with the announcement that it foresees two more equal gains in June and July. In addition, he began to reduce his giant balance sheet by $8 trillion, thereby draining some of the excess liquidity. Critics believe that these movements are late, and therefore inflation is out of control. Defenders believe that the economic recovery needed to be consolidated, that much of the rise in prices is a reaction to external factors, and that this course of action was deliberate.

It remains to be seen whether Powell will succeed in his second term and whether he will be able to contain prices without triggering a recession. At a press conference after the last meeting of the Federal Open Market Committee, he declared himself a fan of Paul Volcker. He did not remember that day one of the phrases of the former Federal Reserve President that remained for posterity: “Inflation is like toothpaste: once taken out, it is very difficult to put it back in the tube.”

Who sets interest rates in the US?

The Board of Governors of the Federal Reserve System has seven members. They have a combined term of 14 years, although they rarely complete it. Every two years, the mandate of one of them begins, proposed by the president and approved by the Senate. The term of office of the chairs and vice chairs of the Federal Reserve System is four years. They are appointed by the President of the United States from among the advisers. Jerome Powell is currently President; Lael Breinar, Vice President; Michelle W. Bowman, Christopher J. Waller and newly confirmed Lisa Cook and Philip Jefferson are councillors, pending Michael Barr’s ratification, which has yet to pass through the Senate.

In the Federal Reserve System, the body responsible for making decisions on monetary policy is the so-called Federal Open Market Committee. It is made up of 12 voting members: seven members of the Fed Council, plus the president of the Federal Reserve Bank of New York, plus four of the other eleven regional Fed presidents who retire each year. The other seven presidents of the Fed’s regional banks can attend meetings and participate in discussions, but without the right to vote.


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