PRESIDENT BARACK OBAMA will today nominate Janet Yellen as new chairman of the powerful US Federal Reserve replacing Ben Bernanke.
Yellen is currently the Fed’s vice chair and her nomination caps a lengthy and politically charged search at a pivotal time for the economy and the Fed’s monetary policies.
If confirmed by the Senate, Yellen would be the first woman to head a major central bank anywhere in the world. She also would be the first Democrat chosen to lead the Fed since Paul Volcker was picked by President Jimmy Carter in 1979.
Obama is scheduled to make the announcement today with Yellen and Bernanke at his side in the White House’s ornate East Room.
Bernanke, 59, will serve until his term ends on 31 January, completing a remarkable eight-year tenure in which he helped pull the U.S. economy out of the worst financial crisis and recession since the 1930s.
(Outgoing Federal Reserve Chairman Ben Bernanke. Pic: AP Photo/Susan Walsh)
Under Bernanke’s leadership, the Fed created extraordinary programs that are credited with helping save the U.S. banking system after the financial crisis erupted in 2008. The Fed lent money to banks after credit markets froze, cut its key short-term interest rate to near zero and bought trillions in bonds to lower long-term borrowing rates.
Yellen, 67, emerged as the top candidate after Lawrence Summers, a former Treasury secretary and White House favorite for the job, withdrew from consideration last month in the face of rising opposition.
A close ally of the chairman, Yellen has been a key architect of the Fed’s efforts under Bernanke to keep interest rates near record lows to support the economy, and she likely would continue steering Fed policy in the same direction as Bernanke.
Her nomination could face resistance from congressional critics who argue that the Fed’s low-rate policies have raised the risk of high inflation and might be breeding dangerous bubbles in assets like stocks or real estate.
The White House announcement comes in the midst of a confrontation between Obama and congressional Republicans, particularly those in the House, over the partial government shutdown and the looming decision on increasing the nation’s $16.7 trillion borrowing limit.
Analysts have said that that the administration probably decided to go ahead with the announcement to send a signal of policy stability to financial markets, where investors are growing increasingly nervous over the shutdown and the possibility of default.