Senate confirms Powell for 2nd term as Fed battles inflation

WASHINGTON (AP) — The Senate on Thursday confirmed Jerome Powell for a second four-year term as Federal Reserve chairman, lending bipartisan support to Powell’s sweeping efforts to rein in the highest inflation in four decades.

The 80-19 vote reflected broad support in Congress for the Fed’s willingness to fight soaring prices with a series of steep interest rate hikes that could extend into next year. The Fed’s goal is to slow borrowing and spending enough to ease inflationary pressures.

Since February, when his first term expired, Powell had led the central bank on a temporary basis.

He faces a difficult and risky task in trying to rein in inflation without weakening the economy to the point of causing a recession. The labor market remains robust and has strengthened to a point Powell called “too hot” and is contributing to an overheated economy.

Soaring prices across the economy have caused suffering for millions of Americans whose wages are not keeping up with the cost of basic necessities such as food, gas and rent. And the prospect of ever-higher interest rates has destabilized financial markets, with stock prices falling for weeks.

Powell’s support on Thursday in the Senate was roughly in line with what he received four years ago, following his first nomination for president by President Donald Trump. At that time, the Senate voted 84-13 to confirm it.

Powell’s confirmation comes even as many economists have sharply criticized the Fed for waiting too long to react to worsening inflation, making its task more difficult and riskier.

In the past, members of Congress have often opposed higher interest rates for fear that they will lead to job losses. The chronically high inflation of the 1970s has been attributed, in part, to political pressure that led the Fed to forgo large rate hikes under Presidents Lyndon Johnson and Richard Nixon.

Powell himself came under heavy criticism from Trump when the Fed raised rates in 2017 and 2018 after the unemployment rate hit a half-century low of 3.5%. Powell reversed some of those hikes in 2019, after the economy slowed following Trump’s tariffs on Chinese imports.

This week, Biden said that while he would respect the Fed’s independence, he supported its efforts to raise borrowing rates, which have already driven up the costs of mortgages, auto loans and business borrowing.

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