Fed candidates say inflation is a “serious threat” and have vowed to fight, Reuters said

By Ann Saphir and Jonnelle Mars

(Reuters) – US Federal Reserve Board candidate Joe Biden said on Wednesday that high inflation was a threat to economic growth and that halting the trend was a key task for the central bank.

“Our most important task is to tackle inflation,” said Lisa Cook, a professor of economics at Michigan State University, who prepared one of the three Fed candidates for a ratification hearing in the U.S. Senate on Thursday.

The Fed must “ensure that inflation falls to levels that meet its targets,” wrote candidate Philip Jefferson, Davidson College’s dean of faculty, and former Fed Governor Sarah Bloom Raskin said reducing inflation was our top priority. while we continue to hold “. economic recovery. ‘

The three Fed candidates were largely seen as partly because Cook’s research focused on inequality and Jefferson on poverty, who could accept inflation in favor of a stronger labor market.

The written testimony released on Wednesday strongly opposed this hypothesis.

Consumer prices have risen by 7% – more than double the Fed’s 2% target – lowering US wages, eating up household budgets and becoming an increasingly political responsibility for Biden, whose popularity has risen as inflation has risen.

Fed officials say interest rates will begin to rise next month, perhaps at a rate not seen for decades, in a bid to cut a rising price trend that threatens to weaken the resurgence of the pandemic recession. Candidate’s remarks suggest that they will join these efforts once confirmed.

VOLCKER FOLLOWS

However, Thursday’s hearing, scheduled for 8:45 a.m. ET, is expected to be hot.

Democrats have praised the candidates, and Republicans have condemned them, especially with Raskin and his position as vice president of Fed oversight, with the intention of eliminating credit crises for oil and gas companies. The White House has come in to try to change the tide.

Raskin said in his testimony that it is not the Fed’s job to tell banks where to lend.

Cook and Jefferson, both added to the now-white Fed Council, have received much less attention from black economists who would make it the most diverse race in the central bank’s 108-year history.

But their monetary policy views could have consequences, as the Fed has been grappling with the real fight against inflation for decades.

Cook called in his testimony Paul Volcker, the central banker who personified the fight against inflation in the 1970s as President of the Fed, saying he would follow the example of his political independence.

“High inflation is a serious threat to a long and lasting spread, which we know raises the standard of living of all Americans and leads to widespread and shared prosperity,” Cook said. “That’s why I’m committed to keeping inflation expectations firmly in place.”

Jefferson also warned that rising inflation could raise inflation expectations. “The Federal Reserve needs to be aware of this risk and ensure that inflation falls to levels that are in line with its targets,” he said.

Candidates must obtain the approval of a majority of the Senate Banking Committee, which is controlled by Democrats, before considering a fully divided Senate.

February 15 has set a tentative date for voting for Biden’s candidates, including the re-election of Fed Chairman Jerome Powell and the appointment of Fed Chairman Lael Brainard as Fed Vice President.