WASHINGTON — President Biden is close to two nominations to the Federal Reserve Board of Governors that would give the Fed its first Latina board member and second-ever black vice president, according to several people familiar with the process.
Mr. Biden is close to nominating Adriana Kugler, an economist with Colombian roots and executive director of the World Bank in the United States, for the sole remaining governorship of the Federal Reserve. In a similar move, he would likely elevate Philip Jefferson, the economist who was overwhelmingly confirmed to the board when Mr. Biden nominated him for an open gubernatorial position, to be vice chairman.
Decisions are not final yet.
A White House spokesman declined to comment on Monday. The Fed did not comment.
If nominated and confirmed by the Senate, Ms. Coogler would fill the governorship recently vacated by Lyle Brainard, who became director of the White House National Economic Council in February.
The Board of Directors of the Federal Reserve Bank is made up of seven members, one of whom serves as the chairman, the other as the vice president, and the other as the vice president to oversee the bank. Ms. Brainard was a Governor and Vice Chair of the Federal Reserve Board.
A change of leadership at the Federal Reserve — the world’s most powerful central bank and America’s main economic policy setter — will reverse the complex set of priorities that the Biden administration is trying to balance. And the administration is under pressure, especially from Sen. Bob Menendez of New Jersey, to appoint a Latino or Latino to the Fed.
Ms. Kugler, formerly an economist and administrator at Georgetown University, was not on the list of potential candidates put forward by Mr. Menendez, a Democrat. But a spokesman for Mr. Menendez said, without commenting on specific candidates, that the senator’s priority was to raise a Latino or Latino qualification to the Fed — whoever that person might be.
No Latino has ever served on the Fed’s board of governors in the central bank’s 109-plus years of history, so Ms. Kugler’s nomination would be a historic first if it ends with a successful confirmation.
The Fed is also approaching a challenging political juncture as it works to slow the economy to contain inflation. The central bank vice president traditionally plays a key role in communicating what the Fed is doing and helping the chair, in this case Jerome H. Powell, build consensus on policy. This may require someone with central bank experience. The job is likely to be tough as the Fed slows the economy and weakens the labor market, drawing ire from both progressive Democrats and — if history is any guide — likely the broader public.
Mr. Jefferson, who took office at the Federal Reserve last May, is an economist who most recently served as an administrator at Davidson College and holds a PhD in economics from the University of Virginia. During his tenure at the Federal Reserve, he developed a reputation for being a curious listener interested in staff economic research, according to a person familiar with his time there.
Ms. Kugler will bring her extensive knowledge of the job market. She was previously the chief economist for the Department of Labor during the Obama administration, serving in that position from 2011 to 2013. She has worked in the economics departments at the University of Houston and Pompeu Fabra University in Barcelona, and holds a Ph.D. from the University of California, Berkeley.
Another open position in the Fed’s leadership ranks could also be filled soon: President of the Federal Reserve Bank of Kansas City.
While the White House nominates leaders for the Federal Reserve’s General Board of Governors, the central bank’s 12 regional reserve banks across the country are semi-private, their leaders chosen by community members and business leaders on their boards.
Philip Swagle, director of the Congressional Budget Office, is on a list of potential candidates for the job, according to a person familiar with the matter. The Congressional Budget Office has not commented on Mr. Swagle’s nomination, nor has the Kansas City Federal Reserve.
If chosen and approved by the Fed’s board of governors, Mr. Swagle will vote on monetary policy in 2025. While the Fed governors and the New York branch chief hold steady votes on monetary policy, other regional bank chiefs rotate on and off the voting benches.
The Federal Reserve meets this week to decide whether to raise interest rates at a time when the banking system is in turmoil – the government announced that JPMorgan has acquired First Republic in the early hours of Monday – but inflation is also proving stubborn.
Central bankers are expected to raise interest rates by a quarter point, but then leave them unchanged at just over 5 percent in the coming months as the economy slows and unemployment rises.
The economic moment makes Fed nominations extraordinarily loud: Whoever fills open positions at the Fed could provide an important voice at the table while officials debate how to strike the delicate balance between controlling inflation and hurting the labor market.
While economists widely agree that some economic pain may be necessary to bring price increases back under control, how much — and how quickly — to tackle inflation will require tough choices.
“The challenges this Fed faces are very different than they have been at any time in the last 40 years,” said Blarina Orochi, chief US economist at T Row Price. “How do they keep this economy in balance where inflation isn’t flat, and where we don’t create too much unemployment?”