By Lindsay (NYSE:LNN) Dunsmuir
(Reuters) - As the U.S. Federal Reserve pivots on monetary policy and flags it may raise interest rates as many as four times this year to tame inflation running at a 40-year high, the composition of the rate-setting committee changes for 2022, starting at this week's meeting.
Fed Board members always have a vote on the Federal Open Market Committee, and currently there are four, although President Joe Biden this month nominated https://www.reuters.com/world/us/biden-nominates-raskin-cook-jefferson-fed-board-2022-01-14 a three-person slate to fill the remaining governor vacancies. They must clear Senate confirmation first, so it is unclear how soon they might be seated, if at all.
The head of the New York Fed also has a permanent vote, while the other four slots rotate between the 11 other regional reserve bank presidents on a yearly basis, even though all policymakers discuss the economic outlook as a group. Here's who has a vote this year and their most recent comments on policy:
JEROME POWELL, CHAIR
Powell, renominated to the central bank's top post by Biden, told lawmakers at his confirmation hearing https://www.reuters.com/business/feds-powell-heads-hill-hearing-with-inflation-focus-2022-01-11 this month "the economy no longer needs or wants the very highly accommodative policy that we've had" as he flagged an indeterminate number of rate rises this year.
He also said he expects to move sooner and faster to reduce the central bank's balance sheet, now nearly $9 trillion, than previously.
"The economy is in a completely different place than it was when we ended asset purchases the last time," Powell said. "The period of time between stopping purchases and beginning runoff will be shorter, and also the balance sheet is much bigger so the runoff can be faster."
LAEL BRAINARD, GOVERNOR
Tapped by Biden to be Fed vice chair, Brainard at her confirmation hearing https://www.reuters.com/world/us/feds-most-important-task-is-control-inflation-brainard-says-2022-01-13 this month said battling inflation was the Fed's "most important task" as she gave the green light to starting rate rises at the central bank's March meeting after the scheduled end of its bond-buying program.
"The (Fed's policy-setting) committee has projected several hikes over the course of the year...Of course we will be in a position to do that I think as soon as our purchases are terminated, and we'll simply have to see what the data requires over the course of the year," Brainard said.
She added the Fed will try to bring inflation down "as quickly as we can but consistent with a sustained and strong recovery."
MICHELLE BOWMAN, GOVERNOR
Bowman has not spoken on monetary policy since October, but in the past has sided with colleagues more in favor of tightening policy. That month she already flagged high inflation may last longer than expected and said she was "very comfortable" https://www.reuters.com/business/feds-bowman-very-comfortable-with-november-taper-sees-inflation-risks-2021-10-14 with beginning to reduce asset purchases in November.
CHRISTOPHER WALLER, GOVERNOR
Waller has been at the forefront in calling for a faster and more aggressive response to inflation and has said four or five rate hikes this year may be needed if inflation doesn't recede.
He backs a March rate liftoff and speedy reduction in the balance sheet. "Inflation has stayed higher for longer than any of us thought it was going to," Waller said earlier this month https://www.reuters.com/article/usa-fed-waller/feds-waller-says-course-of-inflation-this-year-to-dictate-rate-hikes-idUSS0N2RG00H. Once inflation gets down to 2.5% or so - which he expects by the end of this year - rapid rate hikes might no longer be needed, he added.
JOHN WILLIAMS, NEW YORK FED
It is "sensible" to begin raising interest rates this year with inflation high and the economy near maximum employment, Williams said earlier this month https://www.reuters.com/world/us/ny-feds-williams-says-completely-sensible-raise-interest-rates-2022-01-14.
"We are approaching a decision to get that process underway," he said. Williams added he thought the Fed would also reduce its balance sheet quicker than previously.
LORETTA MESTER, CLEVELAND FED
Mester, who tends to favor a slightly more aggressive policy path than some of her colleagues, backs a March liftoff if the economy holds up.
She also favors a speedier balance sheet rundown https://www.reuters.com/article/usa-fed-mester/feds-mester-says-she-supports-reducing-balance-sheet-as-fast-as-feasible-idUSKBN2JM1OS and has not ruled out the idea actively selling assets. "I would like to reduce it ... as fast as we can conditional on it not being disruptive to the financial markets."
JAMES BULLARD, ST. LOUIS FED
Now an anchor of the Fed's hawkish wing, Bullard recently upped the number of rate rises he sees this year. "I actually now think we should maybe go to four hikes in 2022," he said https://www.reuters.com/business/feds-bullard-sees-four-us-rate-hikes-this-year-2022-01-12, starting in March.
The Fed's credibility is more at risk than at any time in his 30 years at the central bank, he said.
ESTHER GEORGE, KANSAS CITY FED
George has a record as a serial dissenter in favor of tighter policy in past rotations as a voter. She has not publicly backed a March rate liftoff but said earlier this month https://www.reuters.com/world/us/fed-should-run-down-balance-sheet-earlier-rather-than-later-george-2022-01-11 that the Fed's "very accommodative" stance of monetary policy was "out of sync with the economic outlook."
On the balance sheet, her preference would be "to opt for running down the balance sheet earlier rather than later as we plot a path for removing monetary accommodation."
PATRICK HARKER, PHILADELPHIA FED
Harker, who will vote as an alternate until a Boston Fed president is appointed, backs a rate hike in March https://www.reuters.com/business/finance/feds-harker-open-more-than-three-rate-hikes-2022-if-inflation-worsens-ft-2022-01-13, the first of at least three quarter-percentage-point increases he sees this year, with a balance sheet reduction beginning in late 2022 or early 2023.