President Barack Obama will nominate Janet Yellen as chairman of the Federal Reserve, putting the world’s most powerful central bank in the hands of its first female leader in its 100-year history.
Obama will announce the nomination at 3 p.m. today in Washington. Yellen, 67, would succeed Ben S. Bernanke, whose term expires on Jan. 31. As a top deputy to Bernanke, Yellen supported the central bank’s unprecedented bond buying programs and was a driving force behind a new strategy adopted in 2012 to commit the central bank to goals on inflation and unemployment.
“She’s even more of a dove than Bernanke is, but there’s nobody who can say she’s not credentialed because of the range of experience she’s got,” said J. Alfred Broaddus, a former president of the Federal Reserve Bank of Richmond. “She has experience that almost nobody else can bring to the table at this point.”
Obama turned to Yellen, vice chairman of the Fed since 2010, after the other leading candidate, former Treasury secretary and White House economic adviser Lawrence Summers, withdrew from consideration amid mounting opposition from Democrats on the Senate Banking Committee.
Nevertheless, Summers himself welcomed the decision, saying in an email that “Janet Yellen is a terrific choice to lead the Federal Reserve. I have admired and learned from her ever since she taught my first macroeconomics graduate class in 1976.”
In Asia, Koichi Hamada, an adviser to Japanese Prime Minister Shinzo Abe, also welcomed Yellen’s nomination, predicting that she won’t rush to exit easing. The concern is that prolonged U.S. stimulus could strengthen the yen and impede Japan’s recovery. South Korea’s finance ministry said Yellen will weigh the effects on other nations of tapering bond buying.
The president’s choice followed a polarizing and unprecedented public contest for a nomination that Obama described in August as one of the most important decisions of his presidency. Yellen was the favorite in surveys of economists and had the backing of 20 members of the Senate Democratic assemlby who signed a July 26 letter to Obama.
So will Yellen come a-yelling when she becomes chief? How will finally putting a woman in charge of the Fed actually impact things?
As the Fed’s No. 2 official, Yellen has articulated the case for maintaining highly accommodative monetary policy. In a series of 2012 speeches, she outlined why interest rates could remain near zero into late 2015, and in a 2011 speech she justified the Fed’s first two rounds of large-scale asset purchases with an estimate that the programs would create 3 million jobs.
Among Yellen’s tasks, if confirmed, will be to execute the unwinding of the Fed’s record monetary stimulus. Bernanke has said the central bank won’t end monthly bond purchases until the labor market shows sign of substantial improvement. The Fed has also announced plans to hold short-term interest rates near zero until the unemployment rate reaches at least 6.5 percent.
What finally pans out will wait to be seen. One thing’s for sure, the workplace will finally have that much needed woman’s touch. International Monetary Fund Managing Director Christine Lagarde is looking forward to a female joining the ranks of central bank governors and according to IMF spokesman Gerry Rice will “no longer feel as lonely” at some male-dominated meetings.
