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What Jerome Powell’s Second-Term Confirmation Could Mean for the Economy

Senado con 80 votos a favor confirma a Jerome Powell para un segundo mandato en la Fed

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Last Thursday, the Senate confirmed Jerome Powell for a second four-year term as head of the Federal Reserve (Fed), despite the fact that the highest inflation the United States has experienced in four decades occurred under his tenure.

The central bank chief received the backing of the majority of senators with 80 votes in favor and 19 against.

Powell took over as Fed chief in 2018 after being appointed by the then-President Donald Trump, a Republican, and in November 2021, he was again nominated for the position by the current president, Joe Biden, a Democrat.

The central bank kept interest rates for two years between 0% and 0.25% to stimulate the economy, but it has already approved two consecutive hikes.

Thus, the official interest rate of the world’s largest economy is now between 0.75% and 1%.

The Fed has anticipated further interest rate hikes with the aim of slowing economic activity sufficiently to combat inflation, but without plunging the U.S. into recession.

Powell was expected to be confirmed without a hitch, having received near-unanimous support from Democrats and Republicans on the Senate Banking Committee in March.

The only person who voted against him then was Senator Elizabeth Warren (D-MA), who considered Powell “a dangerous man” to lead the Fed for having reduced financial regulations, such as the annual controls that served to examine whether large banks could withstand a severe recession.

On Thursday, Warren again voted against Powell, whose candidacy was rejected by other Democrats, such as Cuban-born Senator Bob Menendez, because, according to him, it is a shame that a Hispanic has not yet been appointed to the post.

According to Department of Commerce data published on Wednesday, inflation in the United States continues at historic levels not seen for 40 years, although it moderated slightly in April to 8.3%, two tenths percentage points less than in March.

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