Senate Confirms Jerome Powell as Federal Reserve Chairman -- 2nd Update
January 23 2018 - 6:54PM
Dow Jones News
By David Harrison
The Senate confirmed Jerome Powell to become the 16th chairman
of the Federal Reserve, clearing the way for a new leader likely to
continue raising interest rates to keep the nation's economic
expansion on track.
Mr. Powell, who was confirmed Tuesday by an 85-13 vote, will
take over when Chairwoman Janet Yellen's four-year term as chief
ends Feb. 3. She has said she would leave the Fed board of
governors once her successor is sworn in.
Although Mr. Powell's nomination attracted broad bipartisan
support, it also drew opposition from several potential contenders
in the 2020 presidential race. On the Democratic side, those voting
against his confirmation included Sens. Elizabeth Warren of
Massachusetts, Kamala Harris of California and Cory Booker of New
Jersey. On the Republican side, Sens. Ted Cruz of Texas, Rand Paul
of Kentucky, Mike Lee of Utah and Marco Rubio of Florida voted no.
Independent Sen. Bernie Sanders of Vermont also opposed the
nomination. California Democrat Sen. Dianne Feinstein initially
voted in favor of the nomination but changed her vote after Mr.
Powell had been confirmed.
Mr. Powell, a Fed governor since 2012, will inherit an economy
on the upswing fueled by a booming labor market and strong global
growth. His task will be to sustain the economy's expansion without
letting it pick up so much momentum that the Fed would be forced to
cool it off with sharp rate increases, risking a downturn.
The Fed has been gradually raising short-term interest rates
since late 2015 and last year started shrinking its portfolio of
assets purchased to bolster the economy during and after the
financial crisis.
Officials in December raised the Fed's benchmark rate by a
quarter percentage point to a range between 1.25% and 1.5% and
penciled in three more such moves this year.
Mr. Powell is likely to stick with Ms. Yellen's cautious and
gradual approach to raising rates.
"We've been patient in removing accommodation, and I think that
patience has served us well," Mr. Powell said at his confirmation
hearing Nov. 28, after being nominated by President Donald Trump on
Nov. 2. Now that growth has picked up, "it's time for us to be
normalizing interest rates, " he added.
But those plans could change depending on how the economy
evolves. If inflation remains stuck below the Fed's 2% target, Mr.
Powell and his colleagues could decide to hold off on rate
increases to let price pressures build. Or if the economy shows
signs of overheating, they might want to move more
aggressively.
A spurt of growth driven by the tax overhaul could lead the Fed
to raise rates more quickly to cool off the economy. That could
place Mr. Powell at odds with the White House, which would welcome
a stronger expansion.
"We can afford to go more slowly if we determine that inflation
is going to perform lower than we thought, and we can move more
quickly," Mr. Powell said in November.
Mr. Powell, a lawyer and former private-equity partner, moves
into his new role with less formal training in economics and
monetary policy than many of his predecessors. He will be the first
Fed chairman in three decades who doesn't have a Ph.D. in
economics.
Before joining the Fed, Mr. Powell was a visiting scholar at the
Bipartisan Policy Center in Washington. He also served as a top
Treasury Department official responsible for domestic finance in
the George H.W. Bush administration.
Mr. Powell is the second of Mr. Trump's Fed nominees to be
confirmed, following Randal Quarles, who joined the central bank in
October as vice chairman for supervision.
But Mr. Powell still will have to contend with a depleted Fed
board: The seven-member panel has three vacancies.
Mr. Trump has nominated Marvin Goodfriend, a Carnegie Mellon
University professor and former Fed economist, to fill one of those
positions. The Senate Banking Committee held his confirmation
hearing Tuesday.
Another board seat will open up once Ms. Yellen steps down from
the board of governors.
Write to David Harrison at david.harrison@wsj.com
(END) Dow Jones Newswires
January 23, 2018 19:39 ET (00:39 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.