Stanley Fischer, the former Bank of Israel head picked by President Obama for the No. 2 job at the Federal Reserve, won Senate confirmation Wednesday to become a member of the Fed's board of governors.
The 68-27 vote in favor of Fischer means he will have little trouble being installed as the central bank's vice chair when a separate Senate vote on that appointment is taken later.
Fischer, 70, would succeed Janet L. Yellen, who moved up to become the Fed chairwoman earlier this year. An internationally respected economist with a dual U.S. and Israeli citizenship, Fischer joins the Fed at a challenging time.
Yellen and her colleagues have been gradually reducing their bond-buying stimulus program aimed at lowering long-term interest rates, and the Fed is looking ahead to the day when it will need to raise its key short-term interest rate, which has been pinned near zero since late 2008.
In fact, in their policy meeting last month, Fed officials had a broad discussion about how they might hike rates and manage an "eventual normalization" of monetary policy, according to an account of the meeting, released Wednesday with the usual three-week lag.
Many analysts don't expect the Fed's so-called federal funds rate to rise until about the middle of next year, but that will depend on the economic conditions, in particular employment and inflation trends. After a winter stall, the American economy and job growth are showing signs of gaining momentum again, but the housing market has slowed and the global outlook remains hazy.
In their last meeting three weeks ago, the Fed generally viewed the economy as having "returned to a trajectory of moderate growth," the minutes indicated. But some officials thought it was too early to say the pick-up would be sustained, expressing concerns about a "persistent slowdown in the housing sector" or a "further slowing of growth in China or an increase in geopolitical tensions regarding Russia and Ukraine."
The Fed's next monetary policy meeting is set for June 17-18, likely to be Fischer's first as vice chair of the board.
In recent weeks the Fed has been operating short-handed as a series of departures and the slow confirmation process had left three vacancies in the seven-member board, with another governor, Jeremy C. Stein, set to step down on May 28.
A second Obama nomination to the board, Lael Brainard, a former Treasury official, is also expected to win confirmation, but it isn't clear when that vote will be taken.