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Stanley Fischer, U.S. President Barack Obama's pick for the Federal Reserve vice chair, on Thursday expressed his support for the current path of monetary policy and emphasized the role of the central bank in ensuring financial stability.
"At present, achievement of both maximum employment and price stability requires the continuation of an expansionary monetary policy -- even though the degree of expansion is being gradually and cautiously cut back as the Fed reduces its monthly purchases of longer-term Treasury securities and agency mortgaged-backed securities," Fischer said during a confirmation hearing before the Senate Banking Committee.
The U.S. unemployment rate, at 6.7 percent in February, remained "too high" and the rate of inflation was projected to stay "somewhat below" the Fed's target of 2 percent, said Fischer, who has dual citizenship of the United States and Israel and served as governor of the Bank of Israel from 2005 to 2013.
Citing the latest financial crisis, Fischer emphasized the important role the Fed must play in ensuring financial stability. "The Great Recession has driven home the lesson that the Fed has not only to fulfill its dual mandate, but also to contribute its part to the maintenance of the stability of the financial system," he said.
"The Fed must remain ever-vigilant in supervising and regulating the financial institutions and markets for which it has been assigned responsibility," he added.
Meanwhile, two other nominees for the Fed's board shared the views and endorsed the current policy stance under Chair Janet Yellen during the confirmation hearing.
Jerome Powell, a current Fed governor who has been nominated for a second term, said, "The task for monetary policy will be to provide continued support as long as necessary, and to return policy to a normal stance over time without sparking inflation or financial stability."
Lael Brainard, former U.S. treasury undersecretary for international affairs, told the committee that "I cannot think of a more important moment for the work of the Federal Reserve in promoting price stability and maximum employment alongside financial stability."
During the hearing, no committee member voiced opposition to the three nominees, who are expected to win Senate approval soon.
The three nominations were announced by Obama in January and are subject to confirmation by the Senate. They will fill vacancies on the seven-member Fed Board under Yellen, who took the oath of office last month. This move came at a delicate moment when the Fed has begun gradually normalizing its monetary policy since the start of the year.
Yellen will preside over her first policy meeting and hold a news conference as Fed chair next week. Analysts predict that the central bank will continue to trim its monthly bond purchases at the current pace and end the stimulus program by the end of this year.
In January, the Fed decided to cut back further on its monthly asset purchases from 75 billion U.S. dollars to 65 billion dollars starting in February.
