The U.S. Senate on Wednesday approved former Bank of Israel Governor Stanley Fischer's nomination to the Federal Reserve Board of Governors, adding a potentially influential voice to the developing debate over Fed policy in the post-crisis era.
Fischer, 70, was approved on a 68-27 vote, with all the opposition coming from Republicans. A separate vote, still unscheduled, must be held to confirm his appointment as vice chairman of the U.S. central bank.
The Senate could have considered both nominations back-to-back, but Republicans blocked the more rapid procedure to protest a rules change that allows Democrats to more easily move President Barack Obama's nominees, according to a Senate Democratic aide.
Senate Majority Leader Harry Reid likely will move this week to set a vote on Fischer's vice chairmanship for when the Senate returns from its Memorial Day recess the week of June 1. Analysts expect he will be handily confirmed.
But the vote on Wednesday ensures Fischer, the former head of the Bank of Israel, will attend the Fed's next policy-setting meeting in mid-June, whether as the No. 2 official or not.
Over a career of academic and policy work, as well as three years as an executive at Citigroup, Fischer has emerged as a strong advocate of activist central banking - and particularly of the need to be aggressive in trying to guarantee financial stability.
At the Bank of Israel, he helped steer Israel's economy through the global financial crisis with tactics that included stricter control of mortgage lending and steady intervention in currency markets to prop up the value of the shekel.
Previously, he had served as a top official at the International Monetary Fund during the Asian crisis of the 1990s, an experience that shaped his thinking about the importance of maintaining stable financial systems and capital markets to avoid broader economic problems.
Fischer will bring that sensibility to a Fed board that is in the midst of guiding monetary policy out of a historic period of near-zero interest rates and extensive efforts to stimulate the U.S. economy with trillions of dollars in asset purchases.
During a Senate hearing in March, he broadly endorsed the Fed's current direction, and indicated he felt there was still ample room - as Fed Chair Janet Yellen has suggested - to maintain loose monetary policy to boost employment.
"The mixture that we are seeing coming out of (the) Fed now is approximately appropriate," he said, backing both the low rates approach and the Fed's ongoing effort to curtail a monthly bond-buying program and end it altogether this fall.
The conversation at the Fed, however, is quickly moving beyond the debate over tapering the purchases to headier issues. In coming months, policymakers will make critical judgments over new tools for influencing interest rates and decide when the economy is strong enough to begin hiking rates.
The rate decision in particular will test Yellen's contention that the "slack" in the U.S. labor market might not be taken up for years, and her willingness to let inflation creep above the Fed's 2 percent target if that is needed to bring unemployment down to a level she considers acceptable.
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