Jonnelle and Ann Saphir

(Reuters) –The nominees for the Federal Reserve Board by President Joe Biden came out against rising inflation Wednesday. They stated that high prices are a threat economic growth, and it is the top task of the central bank to stop this trend.

In her prepared remarks, Lisa Cook from Michigan State University, an economics professor, stated that “Our greatest task is to tackle inflation.”

Philip Jefferson, nominee for dean of faculty at Davidson College wrote “ensured that inflation decreases to levels consistent with it goals,” while Sarah Bloom Raskin (ex-Federal governor) stated that reducing inflation must be a top priority to ensure our continued economic recovery.

The three Fed nominees had been widely seen https://www.reuters.com/business/fed-fights-inflation-dovish-may-not-define-bidens-newest-nominees-2022-02-02 as leaning dovish, in part because Cook’s research focused on inequality and Jefferson’s on poverty, suggesting that they might tolerate inflation for the sake of a stronger labor market.

They strongly refuted this assumption in their written testimony, which was released Wednesday.

The consumer price index rose by 7 percent last year — twice as much as the Fed’s goal of 2% — which is more than double what was expected. It has also led to a decrease in American wages and a rise in household spending. Biden has become progressively political liability, with his popularity having suffered from rising inflation.

Fed policymakers signaled that they may raise interest rates next month at a rate not seen for decades as they attempt to end the rising price trend which threatens to undermine the recovery after the pandemic. Once confirmed, the nominations indicate that they will be joining those efforts.

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Still, Thursday’s hearing https://www.banking.senate.gov/hearings/01/25/2022/nomination-hearing, scheduled for 8:45 a.m. E.T. is expected to be very heated.

Democrats have been praising the nominees and Republicans have denigrated them. Republicans are particularly concerned with Raskin, who they believe intends to abuse her Fed Vice Chair of Supervision position to make it impossible for oil companies to borrow. The White House has stepped in https://www.reuters.com/business/white-house-mobilizes-war-room-boost-fed-nominees-attacks-pile-up-2022-02-02 to try to turn the tide.

Raskin in her testimony said https://www.reuters.com/article/usa-fed-nominees-raskin/raskin-tells-senate-it-is-not-feds-job-to-direct-loans-to-or-avoid-certain-sectors-idUSW1N2SF01K it is not the Fed’s role to tell banks where to lend.

Jefferson and Cook are both Black economists. Their additions to the Fed Board, which is currently comprised of all white members, would make them the most racially diverse board in central bank history. They have not received as much attention.

However, their views on monetary policy could play a crucial role in the Fed joining its first serious battle against inflation for decades.

Cook’s testimony referred to Paul Volcker (the Fed chairman) as an example. He was the one who fought against inflation in the 1970s. Cook stated that she would emulate his political independence.

Cook declared that “high inflation is a grave danger to a prolonged, sustained expansion,” which, as we all know, raises the standard for living and contributes to wide-based, shared prosperity. That is why I’m committed to keeping inflation expectations low.

Jefferson warned that an inflation spike could raise inflation expectations. Jefferson stated, “The Federal Reserve needs to be vigilant to this risk” and that it must ensure inflation does not rise to levels inconsistent with its goals.

Prior to being considered for consideration by the close-knit full Senate, the nominees have to win the approval of a majority in the Democrat controlled Senate Banking committee.

For February 15, a tentative date has been fixed for the vote on Biden’s nominees. This will include the nomination of Fed Chair Jerome Powell again and the elevation Fed Governor Lael brainard to the position of Fed vice-chair.