Senate backs Fischer for Fed board

WASHINGTON Wed May 21, 2014 1:41pm EDT

1 of 3. Stanley Fischer, the former chief of the Bank of Israel, testifies before the Senate Banking Committee confirmation hearing on his nomination to be a member and vice chairman of the Federal Reserve Board of Governors on Capitol Hill in Washington March 13, 2014.

Credit: Reuters/Yuri Gripas

Related Topics

WASHINGTON (Reuters) - The U.S. Senate on Wednesday approved Stanley Fischer's nomination to the Federal Reserve Board of Governors, adding a potentially influential voice to the developing debate over Fed policy in the post-crisis era.

Fischer, 70, was approved on a 68-27 vote, with all the opposition coming from Republicans. A separate vote, still unscheduled, must be held to confirm his appointment as vice chairman of the U.S. central bank.

The Senate could have considered both nominations back-to-back, but Republicans blocked the more rapid procedure to protest a rules change that allows Democrats to more easily move President Barack Obama's nominees, according to a Senate Democratic aide.

Senate Majority Leader Harry Reid likely will move this week to set a vote on Fischer's vice chairmanship for when the Senate returns from its Memorial Day recess the week of June 1. Analysts expect he will be handily confirmed.

But the vote on Wednesday ensures Fischer, the former head of the Bank of Israel, will attend the Fed's next policy-setting meeting in mid-June, whether as the No. 2 official or not.

Over a career of academic and policy work, as well as three years as an executive at Citigroup, Fischer has emerged as a strong advocate of activist central banking - and particularly of the need to be aggressive in trying to guarantee financial stability.

At the Bank of Israel, he helped steer Israel's economy through the global financial crisis with tactics that included stricter control of mortgage lending and steady intervention in currency markets to prop up the value of the shekel.

Previously, he had served as a top official at the International Monetary Fund during the Asian crisis of the 1990s, an experience that shaped his thinking about the importance of maintaining stable financial systems and capital markets to avoid broader economic problems.

Fischer will bring that sensibility to a Fed board that is in the midst of guiding monetary policy out of a historic period of near-zero interest rates and extensive efforts to stimulate the U.S. economy with trillions of dollars in asset purchases.

During a Senate hearing in March, he broadly endorsed the Fed's current direction, and indicated he felt there was still ample room - as Fed Chair Janet Yellen has suggested - to maintain loose monetary policy to boost employment.

"The mixture that we are seeing coming out of (the) Fed now is approximately appropriate," he said, backing both the low rates approach and the Fed's ongoing effort to curtail a monthly bond-buying program and end it altogether this fall.

The conversation at the Fed, however, is quickly moving beyond the debate over tapering the purchases to headier issues. In coming months, policymakers will make critical judgments over new tools for influencing interest rates and decide when the economy is strong enough to begin hiking rates.

The rate decision in particular will test Yellen's contention that the "slack" in the U.S. labor market might not be taken up for years, and her willingness to let inflation creep above the Fed's 2 percent target if that is needed to bring unemployment down to a level she considers acceptable.

(Reporting by Howard Schneider and Richard Cowan; Writing by Howard Schneider; Editing by Andrea Ricci)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (7)
willich6 wrote:
Fischer did an excellent job for Israel, and is a very good choice for vice chair of the FED.

May 21, 2014 10:18am EDT  --  Report as abuse
Robertla wrote:
when ever you read an article about the Fed, you see some incredible statement that proposes that some really false logic is the truth….

“let inflation creep above the Fed’s 2 percent target if that is needed to bring unemployment down”

inflation doesn’t bring unemployment down…..there is no causal relationship.

May 21, 2014 2:02pm EDT  --  Report as abuse
PaulBradley wrote:
Stanley “Stan” Fischer (Hebrew: סטנלי פישר) another Israeli/American – with questionable ‘sworn allegiance’ on his way to power in the U.S.A.

May 21, 2014 4:51pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

Recommended Newsletters

Reuters U.S. Top News
A quick-fix on the day's news published with Reuters videos and award-winning news photography and delivered at your choice of one of four times during the day.
Reuters Deals Today
The latest Reuters articles on M&A, IPOs, private equity, hedge funds and regulatory updates delivered to your inbox each day.
Reuters Technology Report
Your daily briefing on the latest tech developments from around the world from Reuters expert tech correspondents.