The U.S. Senate confirmed the economist and President Trump’s nominee Dr. Richard Clarida as the vice-chairman of the U.S. Federal Reserve. Dr. Clarida is a strategic adviser for Pimco since 2006, the bond fund manager, and a Columbia University professor.
The confirmation to the post of the vice-chairman reinforced the central bank’s leadership at a time when it has come under fierce criticism from President Trump for hiking interest rates.
Dr. Clarida received a Senate backing of 69 – 26. The U.S. Senate also confirmed Dr. Clarida as the board governor for a period of 14 years which expires in 2022 and formerly held by Daniel Tarullo. Dr. Clarida will fill the role that was formerly held by Stanley Fischer which was vacated last year.
Dr. Clarida’s confirmation brings the total number of governors to four from the total of seven seats. Dr. Clarida’s confirmation was met with optimism. Rob Nichols, the president of the American Bankers’ Association commented on the confirmation by saying that Clarida was the right choice due to his strong understanding of monetary policy and economics.
Besides Clarida, other nominees still pending include Michelle Bowman who is a banking commissioner at the Kansas state and Marvin Goodfriend a former official at the Richmond Federal Reserve bank. Goodfriend’s nomination was stalled after he encountered opposition on both sides of the U.S. Senate due to his views on monetary policy.
Dr. Clarida’s confirmation faced some opposition from the Democratic Party after his hearing on the hawkish views earlier this year.
In his confirmation hearing that was held in May, Dr. Clarida voiced his support for the monetary policy actions by the current Federal Reserve Chairman, Jerome Powell.
He supported Powell’s drive to raise interest rates at a steady pace from historically low levels and also vowed to ignore political pressure from the U.S. President as well as elsewhere in deciding monetary policy.
Dr. Clarida is the second nomination to the Federal Reserve which also includes Jerome Powell. Still, the U.S. President was seen coming down on the Fed harshly for raising interest rates, taking a detour from the usual policy of U.S. Presidents not commenting on monetary policy.
The Federal Reserve has raised interest rates five times under President Trump’s leadership since January 2017.
The central bank is on course to hike interest rates once again in September with another rate hike likely by end of December this year.
The interest rate hike comes amid the U.S. economy enjoying a steady patch of economic growth and low levels of unemployment.
The unemployment rate has fallen to 3.9% marking a multi-decade low while inflation was seen close to the Federal Reserve’s 2 percent inflation target rate.
While the September rate hike has been fully priced in, the odds for a December rate hike currently stands around 60 percent, according to the Fed funds futures.
The newly appointed vice-chair has also been a regular blogger on the PIMCO website which can be found here.
His most recent article The Fed: More Confident On Outlook And Inflation Target published in January this year marked a follow up of the last monetary policy meeting that was held by Janet Yellen, the former chair of the Federal Reserve.
In his new role, Dr. Clarida will be one of the three officials who will be steering the monetary policy alongside the Fed Chair Jerome Powell and John Williams of the New York Federal Reserve. The newly appointed vice-chairman will be part of the upcoming FOMC meeting due to be held on September 25 – 26.
The markets head into the Fed meeting with the strong prospects of the central bank hiking interest rates by another 25 basis points.