Senate confirms Jefferson to Fed board in 91-7 vote

Diving brief:

  • The Senate on Wednesday confirmed economist Philip Jefferson to the Federal Reserve Board of Governors by a vote of 91 to 7, marking the first time that two black people have simultaneously served on the seven-seat board. (The Senate confirmed Lisa Cook, the first black female Fed board governor, a day earlier.)
  • A Senate vote on renominating Jerome Powell as Fed chair is expected Thursday afternoon.
  • Jefferson’s confirmation leaves a vacant seat on the Fed’s board. Sherrod Brown, D-OH, Chairman of the Senate Banking Committee, told Bloomberg his panel intends to hold a May 19 hearing for Michael Barr, the former Treasury Department official whom President Joe Biden nominated to become the Fed’s vice chairman for oversight.

Overview of the dive:

With Wednesday’s confirmation, Jefferson begins a term at the central bank that runs until 2036 and becomes the fourth black man to serve on the Fed’s board.

“Dr. Jefferson is one of the nation’s leading thinkers on poverty economics and will be a critical voice on the Fed,” Brown said in a statement wednesday. “I look forward to working with Dr. Jefferson and the entire Federal Reserve Board to fight inflation and create an economy that works for everyone.

Much of Jefferson’s work focused on labor markets and poverty, particularly the economic instability faced by black families and female-headed households. He urged the central bank, in a 2018 interview published by the Minneapolis Fed, to be wary of the varying track record of monetary policy across demographic groups.

“We need to be aware of asymmetric or disproportionate effects because this knowledge allows us to reassess a policy that we might otherwise do without these considerations,” he said, according to The Wall Street Journal.

Jefferson’s road to confirmation was far less controversial than Cook’s. While Democrats needed Vice Chairman Kamala Harris on Tuesday to break a 50-50 partisan stalemate over Cook, Jefferson’s rise to the Fed’s board seemed well in hand months ago.

He was the only Fed nominee (of four, including two sitting governors) to win unanimous support in March from the 24-member Senate Banking Committee.

At a February nomination hearing attended by Jefferson and Cook, Republicans repeatedly challenged Cook’s level of experience in monetary policy. Sen. Bill Hagerty, R-TN, for his part, said Cook’s academic background — with its focus on the cost of racial disparities — “doesn’t seem related to the mission of the Federal Reserve.”

Jefferson hasn’t encountered the same setback but has a long history with the Fed. He began his career as a research assistant for the central bank’s board of directors from 1983 to 1985. He returned to the Fed in 1996 as an economist in the central bank’s monetary affairs division , but has spent the past 25 years in academia, teaching economics at Swarthmore College. in Pennsylvania and most recently as Vice President of Academic Affairs at Davidson College in North Carolina.

During his first months on the Fed board, Jefferson will be asked to help stem inflation, which has driven consumer prices up 8.3% on the year through April, according to data released Wednesday.

The Fed approved a half-point interest rate hike last week — the second increase in two months — and signaled two more upward adjustments were likely in June and July.

“The spike in inflation we are witnessing today threatens to raise expectations for future inflation,” Jefferson said during his nomination hearing. “The Federal Reserve must remain alert to this risk and ensure that inflation falls to levels consistent with its objectives.”