Fed could tend to restrictive policy after annual turnover

On paper, the US central bank’s policy-setting committee is poised to lean toward tighter monetary policy this year, as incoming voters in the annual rotation among Fed regional presidents replace some colleagues who they have generally taken a more expansive stance.

But the Biden Administration could tip the balance with its selections to fill three vacant positions.

Incoming voters are Esther George from Kansas, Loretta Mester from Cleveland, James Bullard from saint Louis and the new Fed chairman of Boston, who is in the process of being hired for the position. Meanwhile, Patrick Harker from Philadelphia will cast the Boston vote.

They come in replacement of Charles Evans from Chicago, Raphael Bostic from Atlanta, Thomas Barkin from Richmond Y Mary Daly from San Francisco. Bullard, Mester and George have recently made restrictive comments about the sharp rise in prices.

Still, the bigger question is who will fill the three vacancies on the Fed’s Board of Governors. The White House said Dec. 17 that President Joe Biden plans to name his picks by the end of the year. Since then, he has declined to provide updates on the schedule.

Whoever you choose will have to balance their views on the appropriate policy approach between getting as many people back to work as possible as the economy continues to adjust to COVID-19, with the threat posed by the hottest inflation in a generation. .

Jerome Powell, nominated by Biden Another four years as Fed chairman, he has already led his colleagues to a restrictive turn by pushing the completion of his asset purchase program to March.

The Fed has 19 monetary policymakers when all seven of its Washington board positions are filled. These officials have permanent votes in the Federal Open Market Committee (FOMC, for its acronym in English) that sets rates, as does the head of the New York Fed. The other presidents of the 12 regional branches of the US central bank share the votes of the FOMC on an annual rotating basis.