Lael Brainard, who worked her way up the ladder of successive Democratic administrations, was confirmed by the Senate Tuesday to be the Federal Reserve’s vice chairman.
The vote was 52 to 43.
Brainard, 60, has been a governor at the Fed since 2014 and was the only sitting governor not nominated by President Donald Trump.
Brainard began her Washington career as a top aide to President Bill Clinton on international economic policy.
President Barack Obama tapped her to be Treasury undersecretary for international affairs before selecting her for a slot on the seven-member Fed board of governors. There are also 12 regional Fed presidents who help make interest-rate policy. They are selected by their own board of directors without any input from the White House.
With her connections to Democrats, Brainard has always been on unofficial shortlists for potential top economic-policy jobs. For instance, there was widespread speculated that Hillary Clinton might have named Brainard as her Treasury secretary. This happened again four years later when President Joe Biden was elected.
Brainard has been a strong supporter of the Fed policy shift under former Fed chief Janet Yellen to allow the economy to run hot in order to create conditions for a strong labor market. The Fed decided it would not raise interest rates based on a forecast of higher inflation, because acting on a forecast might cost Americans their jobs.
Inflation surged in 2021 as the economy emerged from the pandemic. Fed officials, including Brainard, believed the price rises were transitory. But inflation has broadened out instead of easing, with the rate of increase in consumer prices hitting a 40-year high of 8.5% in March.
In light of the surge in inflation, Brainard this year has joined all of her colleagues at the Fed in advocating aggressive rate increases to bring Fed policy to “neutral.” Then the Fed can decide if it needs to go further and raise rates to curb inflation.
“By moving expeditiously towards a more neutral posture, it provides the committee with optionality in either direction,” Brainard said, at a recent Wall Street Journal job summit.
The Senate is moving slowly, but surely, to confirm four of Biden’s nominees to the central bank.
In addition to Brainard, the Senate is expected to confirm Fed Chairman Jerome Powell to a second four-year term.
Biden also has nominated two Black economists, Lisa Cook of Michigan State University and Phillip Jefferson of Davidson College, to the Fed board of governors.