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US Senate confirms Jerome Powell as Federal Reserve chair

Updated: 2018-01-24 09:42

The potential for financial deregulation advocated by the Trump administration prompted the most pointed opposition to Powell, a former executive at the Carlyle Group private equity firm whose credentials as Fed chair are rooted in his understanding of markets. Powell is not an economist by training.

"We need a Fed chair who can stand up to Wall Street," said Senator Elizabeth Warren, a Democrat. "That person is not Governor Powell."

The 12 votes against Powell included both Democrats and some conservative Republicans.

Powell, 64, was nominated by Trump in November as a largely uncontroversial pick whose monetary policy views are closely aligned with Yellen's.

He has served on the Fed's board since 2012 and over time became supportive of the consensus forged by Yellen for gradual interest rate increases and a slow decrease in the asset holdings the Fed accumulated while fighting the crisis, without abandoning a willingness to take extraordinary steps again if a crisis recurs.

During a Senate hearing on his nomination in November, Powell said he would "respond decisively," if necessary, to future problems.

Powell has never dissented on a monetary policy decision during his nearly six years at the Fed, though recently released transcripts of central bank deliberations during 2012 showed his discomfort at the time with the Fed's massive bond-buying program.

He later came to see Yellen's go slow approach as important to helping the jobs market recover and to share her concerns that low inflation justified a cautious approach to raising interest rates.

While interest rates have been rising, they remain low in the context of a 4.1 percent unemployment rate, and on an inflation-adjusted basis still hover around zero.

The Fed raised interest rates three times last year and policymakers indicated last month they would likely raise them three times more this year as part of their gradual campaign to put policy on a more normal footing.

Initially tapped for the Fed board by then-President Barack Obama as a moderate Republican, Powell emerged over the fall as Trump's choice to lead the Fed from a slate of possible nominees that included both Yellen and some who might have pursued a sharp policy shift.

The Senate confirmation vote was originally 85-12, but Democratic Senator Dianne Feinstein changed her vote to a "no." Aides to Feinstein were not immediately available to comment on the senator's decision.

Reuters

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