Confirmed
After what seems like an eternity, the Senate confirmed President Biden’s decision to give Fed Chair Jerome Powell a second term. The decision was 80-19, with 6 Democrats and 13 Republicans voting against Powell. This decision was made last fall, but things regarding the economy have done a complete 180 since then, leaving us with a lot of new information about this decision and Powell’s ambitions.
The 6 Democrats were part of Elizabeth Warren’s group who had opposed Powell from the start, disagreeing with his monetary policy decisions and beliefs. Coming into this vote, these 6 votes were expected by everyone in the world. However, Powell lost a good chunk of Republican votes primarily due to what has happened in the last 6 months. Inflation is moving uncontrollably, and some senators are pointing the finger at Powell as the Fed is in charge of monetary policy.
Powell has shown regret to this in multiple interviews, stating that with perfect hindsight he would’ve called for rate hikes a lot sooner. However, he has said that he will continue with the plan of half-percentage point increases unless economic data suggests otherwise, which means a recession will arrive. The economy is in a unique position where the unemployment rate is below 4 percent, but inflation is above 4 percent, putting monetary policymakers in a tough position. The Ukraine war is doing nothing to help Powell, adding to inflation worries, and he has said this would not be easy as wars are inflationary. However, many government members have full faith in Powell due to his pandemic policy, if not the whole country.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
