Lael Brainard, a Federal Reserve governor who President Biden has nominated to be the central bank’s new vice chair, told lawmakers that the central bank will use its policies to wrestle inflation under control in prepared remarks for her confirmation hearing Thursday.
Ms. Brainard, who is facing vetting before the Senate Banking Committee, is likely to garner considerable support among Democrats and may pick up some Republican votes, though how many are unclear at this point.
Her nomination — and her new role at the Fed if the Senate confirms her — comes at a challenging economic moment. Although unemployment is falling rapidly, inflation has taken off, with a report on Wednesday showing that a key price index rose in December at the fastest pace since 1982.
“We are seeing the strongest rebound in growth and decline in unemployment of any recovery in the past five decades,” Ms. Brainard said. “But inflation is too high, and working people around the country are concerned about how far their paychecks will go.”
Ms. Brainard also told lawmakers that the Fed’s policies are “focused on getting inflation back down to 2 percent while sustaining a recovery that includes everyone,” calling that the central bank's “most important task.”
After nearly two years of propping up a virus-stricken economy by keeping interest rates at rock bottom and buying government-backed debt, Fed officials began to slow their large bond purchases late last year. That program is on track to end in March. Officials have signaled in recent weeks that they also expect to lift interest rates to make borrowing more expensive, slowing demand and helping to cool the economy.
Markets increasingly expect four rate increases in 2022, which would put the Fed’s short-term policy interest rate just above 1 percent.
“Today the economy is making welcome progress, but the pandemic continues to pose challenges,” Ms. Brainard said. “Our priority is to protect the gains we have made and support a full recovery.”
Ms. Brainard has been at the Fed since 2014, spanning the Obama, Trump and Biden administrations. Before that, she was a top international official at the Treasury Department. An economist and a Democrat, she had been seen as a potential contender to be Treasury secretary or Fed chair during the Biden administration.
She has a good working relationship with Jerome H. Powell, the Fed chair, who Mr. Biden has renominated for a second term. She used her prepared statement to emphasize that she has worked for many administrations in Washington — Democrats and Republicans alike — while pledging to take the Fed’s mission to fight inflation and its independence from partisan wrangling seriously.
“I will bring a considered and independent voice to our deliberations,” she said.