Obama to choose Janet Yellen for top Fed job
Nomination of first woman to run world’s most influential bank relieves markets
President Barack Obama will nominate Janet Yellen as chairwoman of the Federal Reserve later today, administration officials said last night, ending an unusually public search to fill one of the most important economic policy-making jobs in the world. Photograph: Mary F Calvert/The New York Times
US president Barack Obama will nominate Fed number two Janet Yellen today to run the world’s most influential central bank, providing some relief to markets that would expect her to tread carefully in winding down economic stimulus.
The nomination will put Ms Yellen on course to be the first woman to lead the institution in its 100-year history. The advocate for aggressive action to stimulate US economic growth through low interest rates and large-scale bond purchases would replace Ben Bernanke, whose second term as Fed chairman expires on January 31st.
If confirmed by the US Senate, which is expected to endorse her, she would provide continuity with the policies the Fed has established under Mr Bernanke. Analysts say she would move cautiously in reining in policies in place to shore up the world’s largest economy.
Expectations that the Fed might start to taper its stimulus program have roiled financial markets since May and the central bank shocked investors in September by maintaining its cash injections of $85 billion (€63 billion) a month in full.
Her nomination would come during a political stalemate in Washington that has closed the US government and threatened a US default if lawmakers fail to raise the $16.7 trillion debt ceiling by an October 17th deadline.
US stock index futures rose and the dollar slipped on the news of Ms Yellen’s pending nomination. The debt standoff is fueling expectations the Fed may delay any plans to reduce its stimulus for now.
If confirmed, she would join the Fed’s honor roll along with such household names as Paul Volcker and Alan Greenspan, predecessors as head of an institution that can influence the course of the world economy.
“I believe she’ll be confirmed by a wide margin,” said senator Charles Schumer, a Democrat from New York.
Described as a “good egg” by fellow Fed policymaker Richard Fisher and a “very able person” by Japan’s chief cabinet secretary Yoshihide Suga, her most immediate challenge may be to determine when the Fed should scale back its bond buying.
After September’s surprise decision against tapering, many economists now think the Fed will not move until Mr Bernanke has left office.
Mr Obama turned to Ms Yellen (67) after his former economic adviser Lawrence Summers withdrew from consideration in the face of fierce opposition from within the president’s own Democratic Party, raising questions about his chances of congressional confirmation. The contest between Mr Summers and Ms Yellen played out all summer in a public way not usually associated with the selection of the top US central banker.
Ms Yellen has enjoyed strong support from Democrats. In an unusual move, 20 Senate Democrats signed a letter earlier this year pressing Mr Obama to turn to the former professor from the University of California at Berkeley.
Her Republican backing is much softer. Many Republicans worry Fed policy of holding overnight interest rates at zero and buying bonds aggressively to drive other borrowing costs lower could lead to asset bubbles and an unwanted pickup in inflation.
“I voted against Vice Chairman Yellen’s original nomination to the Fed in 2010 because of her dovish views on monetary policy,” senator Bob Corker of Tennessee said in a statement. “We will closely examine her record since that time, but I am not aware of anything that demonstrates her views have changed.”
Senator Richard Shelby of Alabama, another Republican, said he has concerns about her “proclivity to print money” and her record as a bank regulator.
Still, MS Yellen is expected to garner enough support to secure the 60 votes needed to overcome any procedural hurdles in the 100-seat Senate. Democrats control the chamber 54-46.