President Joe Biden said Friday he will promote Federal Reserve board member Philip Jefferson to the central bank’s No. 2 position and nominate World Bank official Adriana Kugler to an open seat, as the Fed weighs its next moves in the fight against inflation.
The appointments come amid rising pressure on Fed Chair Jerome Powell, who raised interest rates by another quarter of a percentage point last week in a move that will further slow growth and could increase pain in the turbulent banking sector.
Jefferson’s elevation isn’t expected to significantly shift the Fed’s course, though he would play an important role in advising the central bank chief as the institution’s highest-ranking Ph.D. economist. He has only served on the board since last May, but his actions there so far and past work suggest he is a centrist, orthodox policymaker.
The nomination of Kugler, a Colombian-American economist, comes after Sen. Bob Menendez (D-N.J.) urged Biden to fill the vacancy left by Lael Brainard, now the president’s top economic policy adviser, with a Latino candidate. Because there were no other open seats, the senator’s advocacy also contributed to Jefferson’s promotion to vice chair, as it led the White House to pick from one of the existing board members for that job.
If confirmed, Kugler would become the first Hispanic person to have a vote on U.S. interest rate policy. Jefferson’s candidacy is historic in its own right; he would become only the second Black vice chair in the central bank’s history. He was confirmed to the Fed last year in a 91-7 vote.
“With today’s announcement, we are ushering in a new chapter at the Federal Reserve, which for 109 years has never had Latinos or Latinas in the upper echelons of its leadership,” Menendez said in a statement. “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.”
Both candidates would fill their new roles as Powell and his fellow officials assess whether they are done raising interest rates for now. They will be watching closely to ensure price spikes continue to cool.
Fed policymakers have suggested they plan to hold borrowing costs at punishingly high levels until spending and investment slow enough to bring inflation back down toward their 2 percent target.
Sen. Elizabeth Warren (D-Mass.) had called on the White House to nominate someone who would push back more on Powell’s fight against inflation, a path Jefferson has not hinted at charting in his previous speeches, though it’s still early in his tenure.
The nominee was previously vice president for academic affairs and dean of faculty at Davidson College and also worked as a staff economist at the Fed.
Kugler, as U.S. executive director to the World Bank, is the top American representative to the global financial institution. She previously served as chief economist to then-Labor Secretary Hilda Solis in the Obama administration.
Biden also announced he will nominate Lisa Cook, who joined the Fed board last year, to a full 14-year term. The central bank’s board seats have staggered terms, where one expires every two years, and Cook had initially been nominated to the tail end of the term that had been Janet Yellen’s starting in 2010.
“Dr. Jefferson and Dr. Cook will continue to bring valuable insight, expertise, and continuity to the Fed at a critical time for our economy and families across the country,” Biden said in a statement. “I am also proud to nominate Dr. Adriana Kugler to serve as a member of the Board of Governors. Dr. Kugler is a highly qualified and respected economist with deep expertise in labor markets, worker mobility, and youth employment.”
