Democratic senators grill Powell on plan for inflation

Federal Reserve Chairman Jerome Powell is facing questions in private meetings with Democratic senators this week about how he plans to counter soaring inflation, people familiar with the matter tell Axios.

Why it matters: The Democrats' intense focus on inflation reveals their concern rising prices are becoming a political liability. It also shows they're looking to the next Federal Reserve chair to devise a strategy to defeat it. President Biden promised to announce his choice as early as Friday.

• Powell’s private answer — that he plans to reduce the Fed’s $120 billion in monthly asset purchases by $15 billion a month, and then consider raising interest rates — tracks with his public pronouncements.
• Congressional Democrats, and the White House, are bracing for Republicans to turn the Fed nomination — regardless of Biden’s choice — into a venue to air their inflation complaints.

The big picture: Having already signed more than $3 trillion of new spending into law, Biden's decision about who to appoint as Fed chair — as well as three other open seats — will be among the most consequential of his presidency.

• Inflation looms large in the overall political debate, with 87% of Americans concerned about rising prices, according to a new Morning Consult poll.
• Steve Rattner, a former Obama economic adviser, lashed out at the Biden administration on Wednesday in a New York Times op-ed titled: "I Warned the Democrats About Inflation."
• Biden tried to address one aspect of inflation — surging gas prices — on Wednesday by directing his Federal Trade Commission to consider whether “illegal conduct” by the oil industry was driving up prices at the pump.

Driving the news. On Tuesday, Biden said he would reveal his choice for Fed chair in “four days,” suggesting a Friday announcement. The White House bought itself a little more time today by suggesting the decision would come before Thanksgiving.

• Powell met with Sen. John Hickenlooper (D-Colo.) on Tuesday.
• He plans to meet with Sen Joe Manchin (D-W.Va.), who's been consistently critical of the Fed on inflation, later this week, Bloomberg reported.

The intrigue: Speculation over Biden’s choice — and the timing — has been building since the president said in Glasgow, Scotland, this month he would make a decision “fairly quickly.”

• With big banks sitting on billion-dollar bets about how monetary policy will change, Fed watchers are ravenous for any informational nugget that might indicate Biden’s pick, including how long Powell and Fed Governor Lael Brainard spent in their interviews with Biden last week.
• Brainard’s one-hour meeting stretched to 90 minutes, leading some observers to conclude she has the upper edge.
• Brainard backers also noted reports that National Economic Council director Brian Deese, a veteran of Obama confirmation battles and a key White House congressional negotiator, sat in on the interviews.

The other side: While Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking Committee, has said he's certain the Senate "would confirm either of them,” Republicans aren’t convinced there are 50 votes for Brainard.

• And Powell still has influential Democratic backers, like Sen. Jon Tester (D-Mont.), who refused to weigh in on Brainard’s confirmation prospects.
• “I don’t want to go there, because I want Powell to be the person,” Tester told Axios.
• Some Republicans have pledged to vote against Brainard, warning about her politics and potential negative market reaction, Axios reported last month.