By Ann Saphir and Lindsay Dunsmuir
(Reuters) – Containing inflation running at its highest in decades must be a top priority for the Federal Reserve with Americans “suffering” under the rapid pace of price increases, U.S. President Joe Biden’s nominees to the central bank’s Board of Governors said on Thursday.
While the Fed has a dual mandate to promote maximum employment and price stability, the clear need at the moment is to bring inflation down from its highest rate in four decades and back toward the Fed’s flexible target of 2% annually, economist Philip Jefferson said.
“So in this moment … the inflation rate is high relative to the Fed’s target and so the directive is clear,” Jefferson, currently dean of faculty at Davidson College in North Carolina, said in response to a lawmaker’s question during his confirmation hearing at the Senate Banking Committee.
“The Fed must take steps to bring inflation back in line with its target.”
Jefferson’s comment was echoed by economist Lisa Cook of Michigan State University, who said she agreed “with the Fed’s path right now” and was motivated in that regard by seeing the “suffering” of consumers and businesses in the current inflationary environment.
The comments on inflation come as the Fed is preparing to raise interest rates next month for the first time since cutting them to near zero about two years ago to shield the economy from the effects of the global coronavirus pandemic. Their remarks signaled both Jefferson and Cook are prepared to support that effort if they gain confirmation to the Fed board.
Sarah Bloom Raskin, a former Fed governor nominated by Biden to be the vice chair for supervision – the central bank’s top bank regulator – also said in written testimony before the hearing that she backs the mission to lower inflation.
Raskin, however, spent most of the hearing parrying challenges from Republicans about her approach to bank regulation, saying that while she believes banks need strict oversight, it is not her job to tell them how and where to lend https://www.reuters.com/world/us/senate-press-raskin-nomination-be-feds-top-bank-cop-2022-02-03.
(Additional reporting by Jonnelle Marte, Pete Schroeder and Hannah Lang; Writing by Dan Burns; Editing by Andrea Ricci)
