•Press Release Economic Crisis and Recovery Economic Policy Government United States
Washington DC — The findings of a large part of our research point to somewhat more equitable economic growth since the Federal Reserve began giving both parts of its dual mandate equal priority. It is because of this that the Center for Economic and Policy Research (CEPR) reiterates the support of Dr. Lisa Cook to the Board of Governors of the Federal Reserve.
CEPR’s renewed support is warranted because Dr. Cook’s confirmation process has stalled. The Senate committee is now deadlocked 12-12, meaning Dr. Cook has to go through an additional two votes on the Senate floor (one for cloture, one to discharge) to just get officially onto the floor for a final confirmation.
Committee ranking member Patrick J. Toomey (R-Pa.) is claiming Dr. Cook is too timid on fighting inflation and lacks adequate experience in macroeconomic policy. Dr. Cook’s academic and policy experience makes her eminently qualified to serve on the Fed Board. Toomey’s attempt to whip up hysteria about inflation to block the nomination reveals he is willing to sabotage the economy by robbing the Fed of the kind of experience needed to maintain financial stabilization in an economy still emerging from a pandemic.
Until recently, the Fed actually caused most of the recessions that the US experienced since World War II by raising interest rates too fast. Under the Fed’s more balanced approach, it was able to get the unemployment rate down to 3.5 percent in the months before the pandemic, a level many economists wrongly believed would trigger spiraling inflation.
It is reasonable for the Federal Reserve Board to start on a path of moderate rate hikes. The economy is clearly near full employment, so measures aimed at slowing the pace of economic and job growth are appropriate. At the same time, it does not make sense to try to jack up the rate of unemployment to slow wage and price growth.
There is no question that Dr. Cook’s extensive knowledge of the economics of race and gender gaps in earnings and wealth would make a valuable contribution to the Feds balanced approach to equally embrace both aspects of its dual mandate.