AILSA CHANG, HOST:
The nation's top inflation watchdog had a job interview today, and it came when consumer prices are climbing at their fastest pace in nearly four decades. Jerome Powell is President Biden's pick to serve a second term as chairman of the Federal Reserve. And at Powell's confirmation hearing today, Republican Senator Pat Toomey warned that the central bank has already waited too long to get prices under control.
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PAT TOOMEY: Every month that goes by in which inflation in the form of consumer prices is growing faster than wages are gaining is a month in which workers are falling behind.
CHANG: NPR's Scott Horsley joins us now with more. Hey, Scott.
SCOTT HORSLEY, BYLINE: Good evening.
CHANG: Good evening. All right. So Powell and his colleagues at the Fed are clearly under a lot of pressure right now to do something about inflation. What exactly is their plan?
HORSLEY: There is a lot of pressure. Prices have been climbing more than three times as fast as the Fed would like to see, and that's because people have just been buying an awful lot of stuff. And during the pandemic, businesses have not been able to keep up. Now, the central bank can't fix the supply chain problems, but it can try to tamp down on demand by raising interest rates. And Fed policymakers now say they expect to raise rates about three times this year, although Powell says it's still an open question just how hard the central bank will have to hit the brakes.
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JEROME POWELL: It's going to depend on the progress we see on the supply side, the progress we see on inflation. We're gonna have to be just very attentive to what's happening in the economy and willing to adapt, pretty nimbly, our policy as we go through the year.
HORSLEY: The Fed also expects supply problems to ease somewhat this year, especially if the omicron wave passes quickly. But, you know, the Fed's been expecting that kind of relief for a while now, and it hasn't happened yet.
CHANG: Yeah. Well, just to remind everyone, Powell was originally promoted to Fed chairman by then-President Trump. Now he's been renominated by President Biden, and he's pretty likely to be confirmed, right?
HORSLEY: Absolutely. Powell has a lot of support on both sides of the aisle. But that doesn't mean he's in for an easy time there in the second term. In addition to the inflation minefield, there are other policy fights ahead. For example, Democrats like Jack Reed of Rhode Island want the Fed to take a stronger stance against climate change.
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JACK REED: The issue of climate change is absolutely critical. It's an economic issue. I don't think you want to see a lot of banks owning property that's literally underwater.
HORSLEY: Republicans, on the other hand, disagree. They think climate change is well outside the Fed's role. This probably won't trip up Powell's nomination, but it could dog some of the president's other Fed picks. You know, Biden has a chance to fill three more vacancies on the Fed's seven-member governing board.
CHANG: Let me ask you one awkward thing for the central bank. Last year was this whole controversy over stock trading by Fed officials. Was that even addressed in the hearing today?
HORSLEY: It was. You know, just yesterday the Fed's vice chairman, Richard Clarida, announced he's stepping down two weeks ahead of schedule. He's one of several officials who came under scrutiny for stock trades back in 2020 at a time when the Fed was preparing to intervene aggressively in financial markets. Now, those officials insist no rules were broken, but Powell acknowledged it didn't look good. And since then, the Feds adopted some new rules to limit trading by officials.
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POWELL: We do take the need to protect our credibility with the public very seriously. And I think our new system is easily the toughest in government and the toughest I've seen anywhere.
HORSLEY: In fact, some lawmakers say there should be similar trading limits for members of Congress.
CHANG: That is NPR's Scott Horsley.
Thank you, Scott.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
