Senate Confirms Jerome Powell as Fed Chairman

WASHINGTON — Jerome H. Powell sailed to Senate confirmation on Tuesday to become the 16th chairman of the Federal Reserve with a final vote of 85-12. He will replace the outgoing Fed chairwoman, Janet L. Yellen, on Feb. 3.

Powell is a moderate Republican who has served on the Fed’s board since 2012 and voted in favor of every policy decision during that period. He emphasized during his confirmation hearing that he was not planning to push for sharp changes in monetary or regulatory policy.

He will take the helm of the central bank during a period of relative economic tranquillity, in the ninth year of one of the longest uninterrupted expansions in American history. He has said he plans to continue the Fed’s gradual retreat from its postcrisis stimulus campaign and is expected to continue its slow but steady pace in raising interest rates.

Powell will also take the helm as the Trump administration considers rolling back many of the rules imposed on the financial industry in the wake of the 2008 crisis. Powell has said he supports keeping many of those regulations in place but thinks some could be loosened or improved.

Powell, 64, will become the first Fed chairman since the late 1970s who does not hold a degree in economics, but he is deeply versed in finance and public policy. He spent years as an investment banker and private equity investor and also worked in the Treasury Department under President George H.W. Bush.

He won confirmation by a much wider margin than Yellen did four years ago, as most Democrats embraced Trump’s selection. Sen. Sherrod Brown, D-Ohio, the ranking member of the Senate Banking Committee, endorsed Powell on the Senate floor Tuesday.

“His track record over the past six years shows he is a thoughtful policymaker,” Brown said.

Among those voting in opposition were several Democrats considering presidential bids in 2020, and several Republicans who have long opposed the Fed’s stimulus campaign.

The bipartisan support for Powell was a sharp break from another Fed hearing earlier on Tuesday, when Brown and other Democrats questioned the qualifications of Marvin Goodfriend, a conservative economist nominated by Trump for a seat on the Fed’s board.

Goodfriend repeatedly predicted after the 2008 financial crisis that the Fed’s actions were about to unleash higher inflation. That did not happen. Inflation has consistently remained below 2 percent.

At a confirmation hearing Tuesday, Goodfriend was flustered by questions about his predictions. He conceded that some had been wrong, but defended others and declined to explain his thinking.

Sen. Elizabeth Warren, D-Mass., said, “I think based on the kind of judgment you have demonstrated, American families are very lucky that you weren’t on the Fed board over the last several years.” She added that she hoped Goodfriend would not be confirmed to the Fed job.

The rocky performance is unlikely to hurt Goodfriend’s confirmation prospects, as Republicans do not require Democratic support.

Goodfriend, 67, is a professor of economics at Carnegie Mellon University. He also spent 25 years as an economist and monetary policy adviser at the Federal Reserve Bank of Richmond, Virginia. He is widely regarded as a leading exponent of the conservative view that the Fed should focus on controlling inflation using a minimal set of tools, thus limiting its interference with financial markets.

After the crisis, Goodfriend repeatedly criticized the Fed’s stimulus campaign as likely to generate inflation rather than economic revival. He told Bloomberg in 2012 it was “really doubtful” the Fed could reduce unemployment, which was then hovering above 8 percent, to 7 percent. Furthermore, he said, even if the Fed succeeded in doing so, “it would give rise to rising inflation in the next few years, which would be disastrous for the economy.”

The unemployment rate has fallen consistently over the past several years, hitting 4.1 percent in December, while inflation has remained sluggish.

Sen. Mike Crapo, R-Idaho, said Goodfriend was “well qualified.” As a member of the Fed’s board, Goodfriend would hold a vote on the Fed’s monetary policymaking committee, and he would participate in decisions about regulatory policy.

Democrats took a different view, reading some of Goodfriend’s old statements into the record.

“Why were you so wrong so many times?” Brown asked.

Goodfriend responded that the Fed needed to prioritize low inflation.

He said he was committed to the Fed’s “dual mandate” of maximizing employment and stabilizing inflation, but added the best way to maximize employment was to stabilize inflation. In recent years, under Yellen and her predecessor, Ben S. Bernanke, the Fed has sought to maximize employment by stimulating economic growth, and not only by maintaining stable rates of inflation.

Goodfriend has continued to criticize the Fed in recent years. In March, he told a House committee that the Fed’s benchmark interest rate was “too low,” and he endorsed the adoption of a monetary policy rule that would limit the role of human judgment in raising and reducing interest rates.

On Tuesday, Goodfriend said he remained in favor of a policy rule, but he was less critical of current Fed policy, which he described as being “more or less on the right path going forward.”