Obama to nominate Yellen as Fed chair
Janet Yellen will become the first woman to hold the most powerful job in the world economy after administration officials said that President Barack Obama would nominate her as chair of the US Federal Reserve. Mr Obama will formally nominate Ms Yellen at a ceremony at the White House on Wednesday. Current chairman Ben Bernanke will also attend. The choice of Ms Yellen – an architect of the Fed’s aggressive monetary stimulus in recent years as the present vice-chair – will redouble its commitment to those policies and may lengthen the period for which US interest rates stay at zero. Her appointment represents a dramatic change of fortune after Mr Obama’s preferred candidate, former Treasury secretary Lawrence Summers, was forced to withdraw on September 15 following strong opposition from Democratic senators. But Ms Yellen may still face a difficult confirmation, with a senior Republican on the Senate banking committee, Bob Corker, suggesting he would vote against her. "I voted against vice-chairman Yellen’s original nomination to the Fed in 2010 because of her dovish views on monetary policy. We will closely examine her record since that time, but I am not aware of anything that demonstrates her views have changed," Mr Corker said. Mr Bernanke will step down in January with a likely reputation as one of the greatest chairs of the Fed after he helped the US to navigate the worst financial crisis since the Great Depression. Ms Yellen, 67, will be appointed to a four-year term as chair of the Fed that runs until January 2018. She will take over an economy still suffering from a 7.3 per cent unemployment rate more than four years after the end of a deep recession. Over the coming years, her challenge will be to bring the economy back to full employment, and then manage an exit from unconventional monetary policy without triggering a bout of inflation. An academic economist for many years, Ms Yellen became a governor of the Fed in 1994. She later served as chair of President Bill Clinton’s Council of Economic Advisers, president of the San Francisco Fed, and became vice-chair of the Fed in 2010. A graduate of Brown University and Yale, she is married to the Nobel Prize-winning economist George Akerlof , and has one son. In the last few years, Ms Yellen has helped to develop the strategy of "forward guidance", including the Fed’s unemployment rate threshold of 6.5 per cent above which it will not raise interest rates. In an April speech, she suggested the Fed could communicate more about the future path of rates once they start to rise. Ms Yellen is regarded as one of the policy makers most determined to strike an even balance between the Fed’s twin goals of low inflation and maximum employment. She has discussed scenarios where inflation would briefly go above the Fed’s goal of 2 per cent in order to make more rapid progress on bringing down unemployment. Her nomination will now go to the US Senate where the chances of confirmation are high. Democrats are solidly behind Ms Yellen. Some Republicans may oppose Ms Yellen because they disagree with the Fed’s monetary stimulus in recent years. For example, Senator Pat Roberts of Kansas has said he is likely to vote against her, and Senator Rand Paul of Kentucky – whose father is Fed sceptic Ron Paul – may seek to delay her confirmation. But Ms Yellen will need only six Republican votes to reach the bar of 60 to overcome a filibuster. Given that a number of Republicans voted to confirm her as vice-chair in 2010, and the necessity of having a Fed chair, she is likely to overcome that hurdle. Senator Charles E. Schumer said: "She’s an excellent choice and I believe she’ll be confirmed by a wide margin."