Fed nominees say their focus is on beating inflation
5:40 pm Tuesday, June 20th, 2023
By Howard Schneider and Ann Saphir
WASHINGTON (Reuters) – Two Federal Reserve policymakers and an economist nominated to join them on the Fed’s Washington-based board on Tuesday said their focus is on bringing down too-high inflation so that the U.S. economy can get back to sustainable growth.
Inflation has “started to abate” but the Fed will remain focused on returning it to the 2% target, Fed governor and vice chair nominee Philip Jefferson said in testimony prepared for his confirmation hearing on Wednesday before the Senate Banking Committee.
“The economy faces multiple challenges, including inflation, banking-sector stress, and geopolitical instability. The Federal Reserve must remain attentive to them all,” Jefferson said in his brief remarks. “Inflation has started to abate, and I remain focused on returning it to our 2% target.”
Federal Reserve Governor Lisa Cook, renominated to a 14-year term to begin when her current one expires in January, took a sterner tone, calling the current moment a “critical juncture” for the American economy and observing that “it will be essential for the FOMC to act as needed” to bring down inflation.
“As I stated to this committee last year, elevated inflation is a grave threat to sustaining the expansion of the American economy,” Cook said, adding, “if confirmed, I will stay focused on inflation until our job is done.”
Cook and Jefferson joined in the unanimous Fed vote last week to hold the Fed policy rate steady at 5%-5.25%, a decision that Jefferson had earlier said should not be seen as signaling that the rate-hike campaign is over but rather as a way stop to allow policymakers to see more data before deciding on the extent of additional policy firming.
He did not repeat those remarks in his prepared testimony. Neither he nor Cook said anything about how much further the Fed may need to take rates to bring down inflation, now running at more than twice the Fed’s goal.
As a group, Fed policymakers last week signaled two more interest-rate hikes are likely by the end of the year.
The Senate Banking committee on Tuesday also released prepared remarks from Fed Board nominee Adriana Kugler, who said returning inflation to the central bank’s 2% target is key to setting a strong foundation for the U.S. economy.
“My personal and professional experience guides my understanding that high inflation hurts workers and businesses alike, and I believe that it is important to bring inflation down to the Fed’s 2 percent target in order to set a strong foundation to build an economy that supports all Americans,” Kugler said in prepared remarks ahead of her confirmation.
Kugler, a labor economist who currently is the U.S. representative to the World Bank, would be the first-ever Latina on the Fed Board of Governors, addressing the long-standing complaints of Senator Bob Menendez, an influential Democrat who has decried the historic absence of Hispanics in U.S. central bank leadership. Menendez serves on the Senate Banking Committee.
(Reporting by Howard Schneider in Washington, Michael S. Derby and Dan Burns in New York and Ann Saphir in Berkeley, California; Editing by Matthew Lewis)
