Manchin's letter was the first instance of a congressional Democrat urging Fed to reverse course on its current easy money policies. It came as President Joe Biden weighed whether or not to re-appoint Powell as the head of the central bank. It indicated that the moderate wing could oppose Powell. It was also a break with Biden’s economic team that has tried to argue the case for inflation dissipating and Congress should pump trillions more into infrastructure and social spending.Manchin stated that it was crucial to realize that economic rescue measures, which were designed for the Great Depression or Great Recession, "may not be appropriate for today's economy and could lead to higher than desired inflation if they are not removed within a reasonable time."As the U.S. economy was freed from Covid-19 lockdowns, prices for goods and services rose faster than expected. Despite unexpectedly high consumer demand, suppliers have had difficulty keeping up with the pace of factories that are facing pandemic-induced delays.Fed officials and the Biden administration both said that they expect price rises to slow next year, as the economy returns more to equilibrium. Janet Yellen, Treasury Secretary, argued this week that there was a greater risk in not investing enough in the long-term economic health.Manchin does not seem to be interested in buying it.Powell was told by Manchin that the initial amount of stimulus met the crisis moment. However, it was time to make sure we don't overprescribe the patient and stimulate a stronger recovery. This will put at risk our ability respond to any future crises.Powell's term as Fed chairman expires in the first quarter of next year. Biden will make a decision within the next few weeks on whether to continue to serve him, giving markets ample time to process the result.While Powell's approach to inflation has been largely in line with the president, some lawmakers have expressed doubts about the Feds ongoing asset purchases. Although the central bank indicated last month that it was closer to slowing down its purchases, markets don't expect such a move for many months.Although Powell's vote may not be decisive in securing his reappointment, Powell received 84 votes for the first confirmation. However, the letter is one the most vehement criticisms of central banks interest rates policies this year from either side.Although he voted for her in a vote in the full Senate, he opposed Yellen's nomination to the central bank chair in the committee in 2013.A Fed spokesperson stated that the central bank had received Manchins' letter and was ready to respond.
