"Loan Restrictions on Fossil Fuel Companies Are Not Fed's Role... Inflation Control Is Top Priority"

Transformation of Pigeon-Faction Fed Vice Chair Nominee
Limited to Identifying Risk Factors in Fed's Climate Change Response Role
Emphasis on Political Independence of Monetary Policy
Foreign Media Call It a "Notable Change"

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Baek Jong-min] Lael Brainard, the nominee for Vice Chair of the U.S. Federal Reserve (Fed), stated that curbing inflation is the top priority. Brainard, known as the most progressive member within the Fed, appeared to take a low-profile stance ahead of the confirmation vote, denying the possibility of Fed-level lending restrictions on fossil fuel-related companies.

At the Senate confirmation hearing on the 13th (local time), Brainard said, "Inflation is too high. Our monetary policy is focused on bringing inflation down to 2% while sustaining economic recovery." She emphasized, "This is our most important mission."

Brainard added, "We have strong tools and will use them to curb inflation," and elaborated, "We are taking measures, and I am confident that these measures will suppress inflation."

She also mentioned the outlook for interest rate hikes, saying, "We will be in a position to do so as soon as asset purchases end," signaling a rate hike in March.

Brainard said, "Many people are worried that inflation is rising faster than wages," and added, "Our monetary policy focuses on lowering inflation to 2% while maintaining economic recovery for everyone."

Although Brainard, who has received strong support from the progressive camp, has emphasized Fed-level climate change responses and financial institution regulations, she made statements at the hearing that aligned with Republican preferences.

Regarding concerns that the Fed might restrict bank lending to fossil energy-related companies, she said, "We will not require banks to limit lending to specific sectors. That is not our mission." However, she added, "While we will not participate in environmental policy, we must verify whether climate change could adversely affect the financial system."

She argued, "I did not think we needed to study the pandemic, but it is our mission to pay attention to potential risk factors to the financial system."

When Republican Representative Pat Toomey asked whether she would make independent decisions regardless of party affiliation, Brainard responded, "The Fed must make judgments free from political pressure."

The Associated Press noted that Brainard, the only Democrat on the Fed Board of Governors and a supporter of low-interest policies to expand employment, reflects the Fed's shift toward suppressing inflation pressures.

Bloomberg News also described Brainard's intention to fight high inflation as a significant change for a dovish figure.