Democratic senators are privately grilling Federal Reserve Chairman Jay Powell on how he plans to deal with soaring inflation if President Biden renominates him to his position, according to a new report.
Powell’s renomination — which appeared all but certain as recently as a few weeks ago — is being questioned after Fed Governor Lael Brainard was called to meet with Biden last week amid rising prices.
Now, congressional Democrats and the White House are preparing for Republicans to use the Fed nomination process as an opportunity to slam the administration over inflation, according to Axios.
Among the Democrats who have met or plan to meet with Powell this week are Sens. John Hickenlooper of Colorado and Joe Manchin of West Virginia, who’s been particularly critical of the Fed on inflation.
Meanwhile, Powell, who was nominated as chair by President Donald Trump and was confirmed in 2018, has said publicly he plans to counter inflation by potentially raising interest rates as well as reducing the Fed’s $120 billion bond-buying program by $15 billion a month.
Inflation has become an increasingly political issue in recent months. The Labor Department reported last week that its Consumer Price Index, which measures a basket of goods and services as well as energy and food costs, jumped 6.2 percent in October from a year earlier — the most in more than 30 years.
Almost 9 in 10 (87 percent) of Americans in a recent Morning Consult poll admitted they were either “somewhat” or “very” concerned about rising prices, as they head into the holiday gift-buying season.
But the Biden administration, as well as the Fed, have both stuck to the position that severe price increases are only temporary and are rooted in supply chain issues caused by the whiplash of demand tied to the COVID-19 pandemic.
However, a growing array of economists and politicians have said the historic inflation is being exacerbated by the huge amounts of money the Fed pumped into the economy to keep companies and Americans financially afloat throughout the pandemic.
Steve Rattner, a former Obama economic adviser, penned an op-ed for the New York Times on Wednesday in which he declared, “Enough already” about “transitory” inflation.
All the controversy around inflation has heightened scrutiny of Biden’s selection for Fed chair, and anticipation has been building since the beginning of this month, when the president said he would announce his nomination “fairly quickly.”
Speculation heated up last week after Brainard’s one-hour interview with Biden stretched to 90 minutes.
As a Fed governor, Brainard has been vocal about using the Fed’s power to encourage corporate America to focus on sustainability and diversity metrics, positioning her as a favorite among more progressive lawmakers.
Several conservative senators have said they would vote against her nomination, while progressive Democrats like Elizabeth Warren have said they’ll vote against the renomination of Powell.