U.S. President Joe Biden’s nominees to the Federal Reserve Board came out swinging against high inflation on Wednesday, saying that rising prices pose a threat to economic growth and that halting that trend is a top priority for the central bank.
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“Our most important task is tackling inflation,” Michigan State University economics professor Lisa Cook, one of three Fed nominees up for a confirmation hearing at the U.S. Senate on Thursday, said in her prepared remarks.
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The Fed must “ensure that inflation declines to levels consistent with its goals,” wrote nominee Philip Jefferson, dean of faculty at Davidson College, while former Fed governor Sarah Bloom Raskin said reducing inflation must be a “top priority we continue to sustain our economic recovery.”
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The three Fed nominees were largely regarded as dovish, in part because Cook’s research concentrated on inequality and Jefferson’s on poverty, implying that they would tolerate inflation in exchange for a healthier labour market.
Their written testimony, which was released on Wednesday, strongly refuted that assumption.
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Consumer prices climbed 7% this month, more than double the Fed’s target of 2%, undermining American wages, cutting into household budgets, and creating a growing political problem for Biden, whose popularity has plummeted as inflation has risen.
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Fed policymakers have indicated that they would begin raising interest rates next month, possibly at a rate not seen in decades, in an effort to halt the upward pricing trend that threatens to weaken the recovery from the pandemic recession. The words of the nominees indicate that, if confirmed, they will contribute to those initiatives.
Nonetheless, Thursday’s hearing, which begins at 8:45 a.m. E.T., promises to be contentious.
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Democrats have hailed the nominations, but Republicans have chastised them, particularly Raskin and her apparent willingness to exploit her position as the Fed’s vice chair of supervision to deprive oil and gas businesses of credit. The White House has intervened to attempt to change the course of events.