The Senate on Tuesday confirmed economist Richard Clarida to be vice chair of the Federal Reserve, cementing a new era of leadership at the United States' central bank.
Clarida is a widely respected economics professor at Columbia University and has been a managing director at the bond firm PIMCO since 2006. He has experience in academia, financial markets and in D.C. policy circles. A Republican, Clarida served as an assistant secretary at the Treasury Department during the George W. Bush administration. He was nominated to the Fed by President Trump.
The Senate confirmed him by a vote of 69 to 26.
Clarida will now take on the No. 2 leadership position at the Fed, working alongside Chair Jerome H. Powell and New York Fed President John Williams. All three men are new to these roles in the past year, although they have all said they intend to carry out the slow and “gradual” path of raising interest rates that former chair Janet L. Yellen initiated before she left in early February because Trump did not renominate her to the post.
Trump has criticized the Fed numerous times this summer for hiking interest rates too quickly. Trump said he was “not thrilled” with Powell and the interest rates increases again last week and urged the central bank to hold off raising rates. But Powell defended the Fed’s gradual rate hike plan in a speech Friday. Clarida is expected to share Powell’s view that interest rates — which are in a range of 1.75 to 2 percent — need to go slightly higher to keep the economy from overheating.
The Fed is widely expected to hike rates again at its next meeting, in late September, despite Trump’s wishes.
While Trump has lashed out at the Fed, his top economic advisers have been supportive of Powell and his team of central bankers. On Tuesday, Treasury Secretary Steven Mnuchin called Powell a “phenomenal leader” in an appearance on CNBC.
The Fed is an independent agency over which Trump has no influence except for the appointment of the chair, vice chair and the governors. Three of Trump’s Fed nominees have been confirmed so far. Two more -- Michelle Bowman and Mravin Goodfriend -- await confirmation, and then Trump has one more open seat he can nominate someone to fill. The president does not appoint the heads of the regional Fed banks such as the New York Fed. Trump’s Fed nominees have been seen by Wall Street as fairly conventional choices.
Powell has an extensive background in business and private equity, but he does not have a PhD in economics. Clarida and Williams are both PhDs with extensive research credentials, and they are expected to help shape the way the Fed models the economy and makes policy decisions.