The Federal Reserve’s Board of Governors got a new member earlier this week when the Senate confirmed the nomination of Stanley Fischer to the Board. President Obama had nominated Mr. Fischer to be Vice Chairman and a separate vote for that position will be held in the future. Meanwhile, a vote has yet to be held for Lael Brainard who was also nominated by President Obama, but she is expected to be confirmed whenever the vote does take place. Both of these nominees are known as strong willed individuals and will play an important role at the Federal Reserve (Fed) as it continues to execute monetary policy for the country. Since 2009 the Fed has used various tools to keep interest rates low in an effort to stimulate economic growth and reduce unemployment. With the economy now growing steadily the Fed has begun debating how quickly and in what manner it should pare back its stimulus programs. As these programs are wound down, interest rates will increase and this will have an effect on numerous sectors of the economy, including a senior housing industry that has seen a rapid pace of acquisition activity take place this year partially because of low interest rates. Accordingly, analysts have been busy studying the careers of these two nominees in order to gauge how they will approach monetary policy, stimulus measures, and interest rate changes once they begin serving at the Fed.
As a former Bank of Israel Governor, Stanley Fischer has already spent a fair amount of time practicing monetary policy for a major economy. When Mr. Fischer was serving at the Bank of Israel he became concerned that an asset bubble was forming in Israel’s real estate market and used various measures including raising loan-to-value requirements for lending in an effort to deflate this bubble. These actions in conjunction with public statements and speeches that he has given in the past indicate that he favors taking decisive action to address economic problems irrespective of the potential effect these actions might have on inflation. This corresponds with the views that Janet Yellen, the Chairman of the Federal Reserve holds and the two will most likely work together to convince their colleagues of the merits of this position and the need to act thoughtfully and deliberately when winding down the Fed’s stimulus measures in order to ensure that the economy is not negatively affected by these changes.
Lael Brainard is another one of President Obama’s nominees to the Federal Reserve Board of Governors and is also the former Undersecretary for International Affairs at the U.S. Treasury Department. In that role she pushed the European Central Bank to take aggressive action during the financial crisis that nearly overwhelmed Europe in 2009 and threatened to break up the Eurozone. Her background in globalization and international institutions is viewed by many as a welcome complement to Mr. Fischer’s background in banking. Moreover, her actions as undersecretary also lead people to believe that she is in the same camp as Mr. Fischer and Chairman Yellen when it comes to monetary policy and is less concerned with inflation than with maintaining stimulus measures that will keep the economy growing at a healthy pace.
The additions of Mr. Fisher and Ms. Brainard to the Federal Reserve will bring valuable knowledge the Fed and their past actions indicate that they will most likely align themselves with Chairman Yellen and push for decisive action and continued stimulus if they feel it is warranted at any point in the future. In the meantime, senior housing providers and investors who are anxious to obtain financing for growth in today’s low-interest rate environment should contact the successful financing firm Cambridge Realty Capital to learn more about the many different financing options it offers.