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US President Joe Biden is set to choose Philip Jefferson as vice-chair of the Federal Reserve, elevating him from his current role as a governor at the central bank to the crucial post in Jay Powell’s inner circle.
Two people familiar with the matter said Jefferson had emerged as the top choice for the job, though it would not be final until a formal announcement. Biden is also expected to tap Adriana Kugler, an economist who represents the US on the board of the World Bank, to become a Fed governor, which would make her the first Latina to the board of the central bank.
Jefferson will fill a position left vacant by Lael Brainard, who left the Fed in February after serving as vice-chair for less than a year to join the Biden administration as the president’s top economic adviser.
Jefferson is a relatively new member of the Federal Open Market Committee, having been confirmed with bipartisan support as a governor last year. Prior to joining the Fed, Jefferson served as the dean of faculty at Davidson College and was formerly a research economist for the central bank’s board.
In his time at the Fed, Jefferson has emerged as a centrist, backing each interest rate increase of its historic monetary tightening campaign.
In a speech in February, he underscored his commitment to getting inflation back down to the Fed’s longstanding 2 per cent target, noting “persistently high inflation hurts everyone”.
Kugler formerly served as the chief economist of the labour department between 2011 and 2013, and previously worked in the economics department at the University of Houston.
If confirmed, Kugler would join the Fed at a critical juncture as it charts out how much more to raise interest rates, having lifted the federal funds rate a full 5 percentage points in a little over a year. The New York Times had previously reported the expected nominations.
Powell on Wednesday hinted the Fed may soon pause its rate-rising campaign as it grapples with a highly uncertain economic backdrop.
The US banking sector remains under pressure in the wake of multiple failures among midsized lenders, prompting concern of a more severe downturn. Fed staffers already forecast a mild recession later this year, as banks exacerbate a credit crunch that was under way as the Fed ploughed ahead with its tightening campaign.
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