U.S. Markets

U.S. Senate panel narrowly backs Marvin Goodfriend for Fed board

Marvin Goodfriend, nominee to join the Federal Reserve Board of Governors, speaks during a Senate Banking Committee hearing on Capitol Hill in Washington, U.S. January 23, 2018. REUTERS/Aaron P. Bernstein

WASHINGTON (Reuters) - The U.S. Senate Banking Committee on Tuesday narrowly voted to approve Marvin Goodfriend to become a Federal Reserve governor, sending his nomination to the full Senate for a confirmation vote.

The Republican-controlled committee advanced his nomination 13-12 along party lines, foreshadowing what looks set to be a close decision in the full Senate.

Goodfriend, a Carnegie Mellon economics professor, was nominated by President Donald Trump in November to join the U.S. central bank.

During his confirmation hearing last month, Goodfriend defended his past focus on inflation but said under sharp scrutiny from Democrats that his earlier warning about runaway prices had been proved wrong.

Speaking before the Democrats unanimously voted against the nomination, Democratic Senator Sherrod Brown said Goodfriend’s record on inflation was among the reasons for withholding support.

“Stakes are too high for workers, for the economy - we can’t take a chance on someone with a decade-long record of prioritizing hypothetical inflation over real people,” he said.

If approved by the full Senate, Goodfriend would join the Fed board at a time of change in leadership and a staff shortage. New Fed Chair Jerome Powell took up his post on Monday while four of the seven board seats, including the No. 2 position, are currently unfilled.

Policymakers have forecast three U.S. interest rate hikes this year as the Fed continues to steer the economy away from the “easy money” era. Investors widely expect the central bank to lift U.S. borrowing costs at the next policy meeting in March.

Reporting by Lindsay Dunsmuir; editing by David Gregorio, G Crosse