The U.S. Senate on Tuesday confirmed Federal Reserve Governor Jerome Powell as the next head of the central bank, succeeding Janet Yellen in a move likely to provide continuity in U.S. monetary policy as an ageing economic recovery marches on.
The Republican-controlled Senate voted 85-12 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, signalling both Powell`s bipartisan appeal and the gradual 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 policies led to a narrower 56-26 margin when Yellen became chair in 2013, and 70-30 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 with monetary policy on a seemingly steady course towards gradually higher interest rates and a gradually smaller balance sheet, but with brewing debate within the central bank about whether it needs to rethink its approach to inflation, and how a recent massive tax overhaul may effect the economy.
He must also navigate how far to accommodate a push by the Trump administration to roll back some post-crisis financial regulations.
It was the potential for that deregulatory push that 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. He is not an economist by training.
"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 with monetary policy views closely aligned with Yellen`s.
He has served on the Fed`s board since 2012 and over time became increasingly supportive of the consensus forged by Yellen for gradual interest rate increases, a slow but steady decrease in the asset holdings the Fed accumulated in fighting the crisis, and a stated willingness to take extraordinary steps again if crisis re-emerges.
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 programme. He later came to see Yellen`s go slow approach as important to helping the jobs market recover, and to share her concerns that weak inflation justified a continued 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 hiked 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.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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