Fed Officials and Nominees Defend Policy Approach in Senate Hearing
Emphasis on Data and Central Bank Mandates
Two Federal Reserve officials and a labor economist aspiring to join the central bank told U.S. senators on Wednesday that they set policy based on data and the Fed’s official mandates. They pushed back against some Republicans suggesting they might prioritize personal politics. Fed Governor Lisa Cook stated, “I think about the dual mandate first, and I think about the two legs of that dual mandate, and those are maximum employment and stable prices.”
Addressing Inflation Concerns
Cook, Philip Jefferson (a Fed governor nominated for vice chair), and Adriana Kugler (a World Bank executive director nominated for a governor slot) discussed their respective roles. Cook assured fellow Fed members that she is focused on combating high inflation and will continue to do so if confirmed for another term. Kugler also emphasized the importance of focusing on the Fed’s mandate, citing her personal experience growing up in Colombia during a period of high inflation.
Diversity and Prioritizing the Country’s Needs
The Fed has faced pressure in recent years to diversify its largely white male leadership. Republican senators at the hearing expressed concerns about nominees focusing on personal ideologies and political priorities, specifically regarding environmental issues and racial inequality. The nominees reiterated that their policy decisions prioritize risk levels, complexity, and the importance of a diverse banking system with both small and large banks. They also touched on the need to carefully evaluate bank merger applications and avoid undesirable financial sector concentration.