Obama to nominate Yellen as new Fed Chief

Frances colour

Later today, US President Barack Obama, will announce his nomination of Fed number two Janet Yellen to run the world’s most influential central bank.

If confirmed by the US Senate, which is expected to endorse her, she would become the first woman to lead the institution in its 100 year history.  She would replace Ben Bernanke, whose second term as Fed chairman expires on 31 January.

U.S. stock index futures rose and the dollar slipped on the news of Yellen’s pending nomination. The debt standoff is though fuelling expectations that the Fed may delay any plans to reduce its stimulus.

She has been central to moving the Fed toward greater clarity and precision in its communications, an openness which she sees as the key to an effective monetary policy.

Yellen has enjoyed strong support from Democrats. Earlier this year, 20 Senate Democrats took the unusual move of signing a letter pressing Obama to turn to the former professor from the University of California at Berkeley.
A respected economist whose research has taken her deep into theories of monetary policy, she has earned a reputation as one of the Fed officials most worried about unemployment and least concerned about inflation.

Yellen studied economics at Yale University and taught at Berkeley for more than a decade before her first stint as a Fed board governor from 1994 to 1997, a post she left to head President Bill Clinton’s Council of Economic Advisers.  Later she served as president of the San Francisco Federal Reserve Bank, where she witnessed the overheated real estate market giving her insight into the dangers of the housing bubble earlier than many of her peers.

Analysts say she would move cautiously in reining in policies in place to shore up the world’s largest economy.

As chair of the Fed, Yellen would arguably be the most powerful woman in the world.