Aurelia Butler

At the same time, the nominations, announced Friday, augur a tighter regulatory hand for Wall Street under Sarah Bloom Raskin, the former Fed governor whom Biden wants to be vice chair of supervision. The choices, if confirmed by the U.S. Senate, would put a record four women on the seven-member Fed board, who along with the heads of the central bank’s 12 regional banks set interest rates for the world’s biggest economy. Cook, an economics professor at Michigan State University, would be the Fed’s first Black female governor. The Fed has had just three Black governors — all men — in its 108-year existence, and never more than one at a time. All current governors, including recently renominated Fed Chair Jerome Powell, are white. There have also never been more than three female Fed governors at one time, though from April 2011 to May 2012 women constituted a majority of Fed governors because two of the seven Fed board seats were vacant.”The new nominees have generally expressed dovish policy views,” Goldman Sachs (NYSE:GS) economists said in a note, although they added that, given the current high level of inflation, it’s unlikely they’d fight the Fed’s current policy-tightening path. On regulation, they and others noted, Raskin’s advocacy of using the Fed’s tools to fight climate change could signal a more dramatic shift for the banking world.Here is a brief look at each of the three nominees: LISA COOK An economics professor at Michigan State since 2005, Cook has written extensively about racial disparities, documenting the negative impact of anti-Black violence and gender inequality on innovation and economic growth.She has also lived that experience, while also calling herself a “battle-tested optimist” in a 2020 tweet; born in Midgeville, Georgia, she still has scars from being beaten up when she and her sisters were desegregating schools. Cook was an adviser on the transition teams for the Biden-Harris and Obama-Biden administrations, and a senior economist for the White House’s Council of Economic Advisers from 2011 to 2012. She has taught at Harvard University and was a research fellow at Stanford University. She earned her Ph.D. in economics from the University of California, Berkeley. Among her teachers: George Akerlof, a Nobel Prize laureate and husband of U.S. Treasury Secretary Janet Yellen.Cook was nominated to fill a board seat whose 14-year term expires in 2024.Cook, along with Raskin and Jefferson, “are likely to lean dovish and to support a gradual and cautious approach to normalizing the stance of monetary policy,” JP Morgan economist Michael Feroli wrote. “However, we don’t believe their leanings are so extreme as to derail the likely course of policy.” PHILIP JEFFERSON Currently vice president for academic affairs and dean of faculty at Davidson College in North Carolina, Jefferson taught economics for more than two decades at Swarthmore College in Pennsylvania, and before that at Columbia University. His first job after graduating from Vassar College in New York state was as a research assistant at the Fed.In 2005, he wrote a paper arguing that running a “high-pressure” economy with low interest rates boosts the job market. The view is now so orthodox at the U.S. central bank that it is practically enshrined in the recast policy framework it adopted in 2020. At the time, though, it was more controversial, with some making the case that low interest rates could reduce opportunities for workers by promoting investment in automation.Jefferson has also written extensively on wages, poverty, and income distribution. His seat would expire in 2036.”Given that COVID impacted the more vulnerable parts of the population, the new Governors could be more focused on ensuring an inclusive labor recovery,” TD Securities economists wrote in a note Friday.SARAH BLOOM RASKINA Harvard-trained lawyer with an undergraduate degree in economics from Amherst College in Massachusetts, Raskin served on the Fed’s board from 2010 to 2014 before becoming the U.S. Treasury’s deputy secretary. Transcripts of policy-making meetings suggest Raskin leaned dovish on policy. It’s unclear how relevant that view would be to the Fed’s current policy trajectory, given what they now broadly see as alarmingly high inflation that warrants a muscular response. On supervision, however, Raskin is widely expected to press for stricter scrutiny of banks, drawing a warning from the Senate Banking Committee’s top Republican, Pat Toomey, who suggested she would try to stop banks from lending to oil companies, and praise from his Democratic colleague Elizabeth Warren, who called Raskin a “tough and thoughtful” financial regulator.The vice chair of supervision term lasts four years; her seat on the board would expire in 2032. More

(Reuters) – U.S. central bankers, in a last flurry of public comments before their upcoming January policy meeting, are making it crystal clear: they’ll likely start raising interest rates as early as March to rein in high inflation likely to be made worse by the current surge of COVID-19.It is “sensible” for the central bank to begin raising interest rates this year, following dramatic improvements in the labor market and inflation that is well above the Fed’s 2% target, New York Federal Reserve Bank President John Williams said on Friday. “We see inflation that’s obviously higher than we want and not coming down yet,” Williams told reporters. “We’re approaching that kind of decision. That makes sense.” While Williams declined to say when exactly he expects the first rate increase, about half a dozen policymakers this week signaled the Fed could raise interest rates starting in March. The insistence on the likelihood of a March rate hike reflects the policy bind the Fed finds itself in: searing hot inflation showing few signs of receding at a time the Fed is still locked into a bond-buying program designed to stimulate growth, with rates stuck at near-zero levels. In December, as that policy bind became more obvious, policymakers began cutting back their bond purchases more quickly to get into position for a possible earlier start to rate hikes. Now that possibility has blossomed into a near-certainty, at least as measured by bets in financial markets: Traders of interest rate futures see an 86% chance of a rate increase in March. Policymakers say that once they raise rates above today’s low levels, they can begin the next phase of removing support – offloading more than $8 trillion in bond holdings accumulated to help lower long-term interest rates. But they caution the timing of those moves will depend on how long it takes the economy to resolve the disruptions caused by the pandemic. THE OMICRON EFFECT Policymakers noted that the recent surge in infections caused by the Omicron COVID-19 variant could slow economic growth and prolong the supply chain disruptions that contributed to overly high inflation. The Fed needs to raise interest rates to reduce demand to bring it better in line with crimped supply, said San Francisco Fed President Mary Daly.”We are going to have to adjust policy to ensure we achieve price stability,” Daly said during a New York Times interview on Twitter (NYSE:TWTR) Spaces. “We want to bridle the economy a little bit.” Williams said the U.S. economy could grow 3.5% this year, a stepdown from the surge in 2021 but still solid. “Once the Omicron wave subsides, the economy should return to a solid growth trajectory and these supply constraints on the economy should ebb over time,” Williams said during a virtual event organized by the Council on Foreign Relations.The Fed official said he expects the labor market to continue healing as the economy grows, forecasting that the unemployment rate will drop to 3.5% this year. Pricing pressures may ease as economic growth slows and supply constraints are resolved, Williams said, adding that he expects inflation to drop to around 2.5% this year and close to 2% in 2023. Consumer prices posted their biggest annual rise in nearly 40 years last month.Williams said “gradually” raising interest rates would be the next step in removing accommodation, but the exact timing and pacing of those rate hikes will depend on what happens with inflation and the economy. More