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.
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