Federal Reserve Blog

Finance Blogs » Federal Reserve » Nominees pledge to help Fed stay steady

Nominees pledge to help Fed stay steady

By Crissinda Ponder · Bankrate.com
Wednesday, March 12, 2014
Posted: 5 pm ET

President Barack Obama's nominees for the Federal Reserve's board of governors emphasized the importance of the central bank taking steps to promote a stable economy in statements released Wednesday.

The Fed has been on a mission to strengthen the economy in the aftermath of the Great Recession by keeping interest rates artificially low and purchasing long-term U.S. Treasury and mortgage bonds.

While progress has been made, "normalcy has not been restored," Stanley Fischer, Obama's nominee for the Fed's vice chair and a former governor of the Bank of Israel, said in his written testimony.

Fischer and Fed governor nominees Lael Brainard and Jerome Powell will be grilled during a confirmation hearing before the Senate Banking Committee.

Too soon to taper?

During the last two policy-making meetings, the Fed scaled back its bond-buying program because the labor market and overall economy showed signs of improvement. But Fischer argued that the Fed shouldn't have been so quick to taper its stimulus because "achievement of both maximum employment and price stability requires the continuation of an expansionary monetary policy."

In her written testimony, Brainard said the Fed should be more hands-on and promised she would be "intensely focused on safeguarding the Fed's hard-won credibility in preserving price stability, while supporting its indispensable role in getting Americans back to work, and strengthening its role in ensuring a safe and sound financial system."

The former top diplomat of the Treasury Department also stressed that the Fed should continue "robust implementation of financial reform and enhanced supervision" of the economy to prevent another crisis.

'Careful balancing' required

The pace at which the economy is recovering is uneven and frustrating, and the Fed should continue to provide monetary policy support for as long as it's needed, said Fed Governor Powell, who is a renominee.

"This will require a careful balancing, as there are risks from removing monetary accommodation too soon as well as too late," Powell's written testimony said. His previous term ended Jan. 31.

Another common thread among the nominees' testimony was working to solve the "too-big-too-fail" problem that has come to characterize large banking institutions.

Follow me on Twitter: @CrissiPonder.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
Add a comment

(Comments may take 5-10 minutes to appear)