A Colombian-American, Kugler would be the first-ever Latina on the Fed Board of Governors, addressing the long-standing complaints of Senator Bob Menendez, an influential Democrat who has decried the historic absence of Hispanics in U.S. central bank leadership.
"We are finally giving Latinos, all 62 million of us who call this country home, a seat at the table where the most consequential decisions on monetary policy are made," Menendez in a statement, pledging to fight for swift confirmations for all three in the closely divided Senate.
Kugler, 53, is a PhD economist who has researched extensively on U.S. and international labor markets and served as the Labor Department's chief economist under President Barack Obama. Biden appointed her last year to her World Bank role, where she is one of 25 national executive directors at the global development lender.
Jefferson, 61, would become the second-ever Black vice chair, the prior being Roger Ferguson who held the post roughly two decades ago.
Jefferson's elevation to the No. 2 spot comes a year into a relatively subdued tenure on the Fed board during which he has offered limited views on monetary policy in the public sphere. He has also voted in favor of each of the eight interest rate increases the Fed has delivered since he joined the seven-member board after an easy Senate confirmation in May 2022. Cook, 58, the first Black woman to serve on the Fed board, was approved by the Senate a year ago on a narrow 51-50 party line vote. Previously she was a Michigan State University economics professor and was a senior economist at the Council of Economic Advisers during the Obama administration. She, too, has voted in favor of the Fed's ongoing rate increases.
HISTORIC TIGHTENING NEARS ENDGAME The nominations to the world's top central bank come as the Fed opens a new chapter in its battle against high inflation.
After just over a year of the steepest round of interest-rate hikes in 40 years, the Fed on May 3 nudged its policy rate to just over 5% and signaled it may be time to take a pause and assess whether any more hikes are needed.
Central bankers want policy tight enough to bring down inflation, now running at more than twice their 2% goal, but not so tight it craters a labor market that so far has weathered the steeper borrowing costs with surprising strength. Finding that balance will be a tricky task. Meanwhile Biden is in a standoff with Republicans over the debt limit that Treasury Secretary Janet Yellen says could leave the government short of the cash it needs to pay its bills as early as June 1. A default would send the economy into the recession it has so far avoided, analysts say, and do long-term damage to the nation to boot. Powell is at a "critical juncture," said Andrew Levin, a Dartmouth professor and a special advisor to Janet Yellen when she was Fed vice chair, where some policymakers may want higher rates while others resist. In Jefferson, Levin said, Powell will have a sharp deputy who can both act as a conduit for those disparate voices and help him sort through all of it.
"Having diverse perspectives is really important to
making decisions like this that affect every American," Levin
said, and both Kugler and Jefferson add exactly that.
CONFIDENCE IN POWELL Still, the appointment of Jefferson, a PhD economist who has spent most of his career as a college economics professor, marks a departure from a recent run of vice chairs with extensive monetary policy expertise. Brainard, for instance, served as a Fed Board member for eight years before getting the No. 2 role.
The move suggests Biden continues to have confidence in Powell's agenda-setting, even as it risks putting some of the historic employment gains under the president's watch at risk with potentially more policy tightening to come, Capital III's Karim Basta said. The Fed vice chair typically works closely with the Fed chair and the New York Fed president - currently John Williams - as a "troika" who formulate policy options that feed into rate-setting decisions made twice a quarter by the Fed's 19 policymakers.
Jefferson has a given a handful of speeches as Fed governor, arguing among other things a key point Powell has made repeatedly – that it is possible, though tricky, to win the inflation fight without sending the economy into recession.
On Friday, after his nomination, he took to the stage in front of a roomful of sometimes ardent critics of Fed policy to defend the U.S. central bank's inflation fight,
declaring
policy to be "on track" and promising to pursue both of the
Fed's goals, including full employment, with seriousness and
humility.
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(Reporting by Ann Saphir;
Editing by Dan Burns, Andrea Ricci and Diane Craft)
