Joe Manchin ‘deeply involved’ about Fed’s easy-money coverage, urges Powell to taper
Senator Joe Manchin (D-WV) leaves a bipartisan senatorial meeting in the office of Senator Kyrsten Sinema (D-AZ) on Capitol Hill on June 22, 2021 in Washington, DC.
Drew Angerer | Getty Images
Senator Joe Manchin, DW.Va., said Thursday he was “deeply concerned” about the Federal Reserve’s continued efforts to shore up the US economy and urged the central bank to reduce its emergency efforts.
“With the recession over and our strong economic recovery in full swing, I am increasingly concerned that the Fed is continuing to deliver record levels of stimulus to our economy,” the conservative Democrat wrote in a letter to Fed Chairman Jerome Powell.
Manchin said he was concerned that further Fed incentives combined with trillions of Democrat-led spending will “overheat our economy and inevitably inflation taxes that hard-working Americans cannot afford.”
Manchin has become a key figure in his party’s efforts to get through an ambitious legislative agenda backed by President Joe Biden.
The West Virginian’s letter came as the Senate was debating amendments to the $ 1 trillion bipartisan infrastructure bill that could pass the Chamber in a matter of days.
The Democrats, meanwhile, are drafting a separate $ 3.5 trillion reconciliation bill aimed at tackling climate change, helping U.S. workers, and other priorities. Manchin’s vote is necessary for the Democrats as they need all 50 members of their caucus to approve the passage of the Reconciliation Act, with Vice President Kamala Harris providing the casting vote.
Senate Chairman Chuck Schumer, DN.Y., and the Fed did not immediately respond to CNBC’s requests for comment.
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The Federal Reserve cut interest rates and began buying billions in government bonds in March 2020 to ensure easy access to capital as the Covid-19 virus forced thousands of US companies to shut down.
Economists and politicians alike attribute these measures to alleviating the pandemic recession and promoting a faster recovery.
Some Fed officials, including Vice Chairman Richard Clarida, have begun to signal that it is almost time for the central bank to curb these contingency measures as the economy and inflation rebound.
Powell’s term expires in February, although he has a good chance of keeping his job. Manchin is not on the Senate Banking Committee, which will play a key role in determining the next Fed chairman.