Senate confirms Lael Brainard as Fed vice chair

The U.S. Senate on Tuesday confirmed Lael Brainard to be the Federal Reserve’s next vice chair, a long-awaited step in her ascent to the highest ranks of the nation’s central bank that cements her position as a key deputy to Chair Jerome Powell.

Though the vote came down to a close 52-43 margin, her confirmation was unsurprising. Brainard won support from Democrats and a handful of Republicans, including Wyoming Sen. Cynthia Lummis.

The vote proved tighter than expected because both Sens. Chris Murphy, D-Conn., and Ron Wyden, D-Ore., tested positive for Covid-19 and were unable to offer their formal support.

Brainard’s promotion, expected for weeks, is unlikely to change the Fed’s plan to increase short-term interest rates. She has served on the central bank’s board for years. Brainard, Powell and other central bank officials have promised over the past few months to hike interest rates and otherwise pull back on monetary stimulus to stop prices from rising at their current pace.

Inflation’s rapid climb, and unease over the Fed’s plans to make it more expensive to borrow, have put financial markets on edge this year. The SP 500, the broad market index that tracks the equity performance of the largest U.S. companies, has fallen more than 11% this year.

Policymakers “have decided they need to get out in front of the rise in inflation as soon as possible to correct the situation,” Steven Ricchiuto, chief U.S. economist at Mizuho Securities USA, wrote in a note to clients Tuesday morning.

“The question investors need to answer is: When will enough be enough when it comes to the number?” he added.

Outside of monetary policy, Brainard has made a habit of objecting to otherwise-unanimous motions at the Fed to roll back financial regulations. Over the past four years, she opposed a series of steps by the central bank to ease laws enacted after the financial crisis of 2008-2009.

Until her first objection in 2018, no Fed governor had dissented since 2011.

Article source: https://www.cnbc.com/2022/04/26/senate-confirms-lael-brainard-as-fed-vice-chair.html