U.S. Senate confirms Jerome Powell as Federal Reserve chair


WASHINGTON, Jan 23 (Reuters) – The U.S. Senate on Tuesday
confirmed Federal Reserve Governor Jerome Powell as the next
head of the central bank, succeeding Janet Yellen, a move likely
to provide continuity in U.S. monetary policy with the economy
growing now for nine years straight.

The Republican-controlled Senate voted 84-13 to approve the
64-year-old lawyer to a four-year term as Fed chair beginning
early next month.

It was the most lopsided of recent Fed chair votes,
signaling both Powell’s bipartisan appeal and the ebbing of some
of the tensions raised by the central bank’s aggressive response
to the 2007-2009 financial crisis and recession.

Controversy over those Fed policies led to a narrower 56-26
vote margin when Yellen became chair in 2013, and a 70-30 vote
when former chair Ben Bernanke was named to a second term.

Powell will be “central to ensuring a safe and sound
financial system while supporting a vibrant, growing economy,”
banking committee chairman and Idaho Republican Mike Crapo said
on the Senate floor. “He will play a key role in rightsizing
federal regulations and alleviating unnecessary burdens.”

Powell takes over as chair with U.S. monetary policy on a
steady course toward gradually higher interest rates and a
smaller balance sheet.

However, a debate is brewing within the central bank about
whether it needs to rethink its approach to inflation and
whether the recent massive tax overhaul legislation will affect
the U.S. economy.

Powell must also decide how far to accommodate a push by the
Trump administration to roll back some post-crisis financial

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

“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

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.
(Reporting by Howard Schneider; editing by Tim Ahmann and Clive