(Bloomberg) — President Joe Biden’s latest picks for the Federal Reserve would further transform the diversity of the US central bank’s leadership in just two years.
While the overall makeup is still overwhelmingly White and male, Biden said Friday he will nominate Adriana Kugler, a Colombian-American economist who is currently the US representative to the World Bank, as the first Latina to serve on the Fed’s Board of Governors. Philip Jefferson, who was sworn in as a governor last May, will become the second Black American to serve as its vice chairman. Both positions require Senate confirmation.
Kugler, 53, would be the first person of Latino heritage in a top leadership spot at the central bank in its 109-year history, tapped to fill a vacancy created when then-Vice Chair Lael Brainard left in February. The appointment came after years of pressure from Senator Robert Menendez and other lawmakers to make the Fed more representative of the population it serves.
Biden also announced his intent to nominate Lisa Cook, 58, who joined the board as a governor last year, to a full 14-year term. Her current term expires in January.
A relatively new arrival on the board, Jefferson’s public remarks suggest he shares the consensus view on the Fed’s policy-setting committee that officials are steadfast in their resolve to quell decades-high inflation. That’s a message he will be expected to amplify as Chair Jerome Powell’s No. 2 — the vice chairman typically helps communicate the chair’s views to the rest of the committee and the public.
“I am committed to lowering inflation to our 2% target,” Jefferson said in a February speech.
He echoed those comments in March, saying that the Fed should bring inflation down “sooner as opposed to later” but in a way that doesn’t cause any more harm to the economy than is necessary.
Before joining the Fed last year, Jefferson, 61, had spent most of his career in academia, most recently as the vice president for academic affairs and economics professor at Davidson College in North Carolina. He worked at the Fed twice before that, in the board’s monetary affairs division and in the fiscal analysis section.
Jefferson has authored and edited books and articles on poverty, and inequality has been one of the focus areas of his teaching. He also taught at Columbia University, the University of Virginia, Swarthmore College, and the University of California, Berkeley.
As a student, Jefferson took part in the American Economic Association’s Pipeline Program for minority students, which he credits with solidifying his decision to pursue a doctorate degree in economics.
The Senate voted 91 to 7 to confirm Jefferson to the board last year, indicating he may again garner broad bipartisan support for his new position. He won praise from senators in his confirmation hearing for voicing strong support for the Fed’s inflation mandate.
Kugler will bring labor-market expertise to the central bank at a pivotal time.
After a year of rapid rate increases to cool inflation, Fed officials earlier this month signaled a willingness to pause and assess the impact of tighter monetary policy on segments of the economy, including the labor market. Kugler’s past research into workforce issues such as youth employment and unemployment insurance, including during a stint as the Labor Department’s chief economist in President Barack Obama’s administration, could prove especially helpful as the Fed navigates this new phase in policy.
One key question is whether Kugler will take a more skeptical view of the need to raise rates further to tame stubborn inflation, especially if the labor market starts to weaken significantly. Brainard was one of the Fed’s most dovish members, and progressive Democrats have called on the White House to nominate a candidate who would take a similar view, and serve as a counter to what they see as Powell’s singular focus on taming prices.
Kugler, who was confirmed by the Senate to her World Bank post with broad support last year, would become the first senior Fed official of Latino heritage. Born in the US to Colombian parents, Kugler spent part of her upbringing in Bogota and has also published extensively on international development.
She comes from a family of economists. Her father was an economist who worked with the World Bank on development projects throughout South and Central America, and her brother Maurice Kugler is a professor of public policy at George Mason University. Kugler’s grandparents fled Europe in 1939, leaving behind relatives who died in concentration camps during the Holocaust, she said at her 2021 Senate confirmation hearing.
Kugler obtained her doctorate in economics at the University of California, Berkeley, under the advisement of Nobel Prize-winning economist George Akerlof, who is married to Treasury Secretary and former Fed Chair Janet Yellen.
“It’s good for the Federal Reserve to have her views,” said Mauricio Cardenas, the former Colombian finance minister who met Kugler at UC Berkeley when they were both pursuing their doctorates. “It’s very good for Latinx economists and it’s also very good for Colombia because it’s her home country, it’s the country where she grew up.”