Federal Reserve Board Member Lael Brainard speaks after being nominated by U.S. President Joe Biden to be Vice Chair of the Federal Reserve in the South Court Auditorium of the Eisenhower Executive Office Building at the White House in Washington, United States, on November 22, 2021 .
Kevin Lamarque | Reuters
The US Senate on Tuesday confirmed Lael Brainard as the next vice chair of the Federal Reserve, a long-awaited step in her rise to the highest echelons of the country’s central bank that cements her position as a key deputy to Chair Jerome Powell.
Although the vote fell to a narrow 52-43 margin, their confirmation was not surprising. Brainard won support from Democrats and a handful of Republicans, including Wyoming Senator Cynthia Lummis.
The vote proved closer than expected as 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, which has been awaited for weeks, will do little to change the Fed’s plan to raise short-term interest rates. She has been on the Central Bank Board of Directors for many years. Brainard, Powell and other central bank officials have vowed in recent months to raise interest rates and otherwise roll back monetary stimulus to prevent prices from rising at their current pace.
Soaring inflation and unease about the Fed’s plans to make borrowing more expensive have made financial markets nervous this year. The S&P 500, the broad market index that tracks the stock performance of the largest US companies, is down more than 11% this year.
Policymakers “have decided that they must counter the rise in inflation as soon as possible to rectify the situation,” Steven Ricchiuto, chief US economist at Mizuho Securities USA, wrote in a note to clients Tuesday morning.
“The question investors need to answer is when it comes to numbers, when is enough enough?” he added.
Outside of monetary policy, Brainard has made a habit of opposing otherwise unanimous requests from the Fed to roll back financial regulation. Over the past four years, she has opposed a series of moves by the central bank to relax laws enacted in the wake of the 2008-2009 financial crisis.
Until their first objection in 2018, no Fed governor had objected since 2011.
CNBC Policy
Read more about CNBC’s political coverage:
Several other Fed nominees selected by President Joe Biden are awaiting action in the Senate. The president nominated Powell for a second term as head of the central bank and chose two economists, Lisa Cook and Philip Jefferson, as governors on the Fed’s seven-member board.
Some analysts and economists say Jefferson and Cook may favor more modest rate hikes over time, but both said in their Senate hearings that they feel committed to using interest rates to quell inflation.
The Fed has an inflation target of around 2%, but a combination of disrupted supply chains, Russia’s invasion of Ukraine and fierce consumer demand have pushed prices higher by more than 8% over the past 12 months.
A procedural vote on Cook’s nomination, which would allow Senate Majority Leader Chuck Schumer, DN.Y., to close the debate and move it forward to a final confirmation vote, is scheduled for later Tuesday afternoon.