President Obama on Wednesday will nominate Federal Reserve vice chairman Janet Yellen to lead the U.S. central bank, officials said, selecting a renowned economist with a focus on combating unemployment for one of the most powerful positions in the world.
Yellen would become the first female chief of the central bank. As Fed chairman, she would have vast power over the economy, and her record suggests that she would use it to continue for as long as possible a stimulus program aimed at boosting growth. She would also be the top steward of the nation’s financial system, an area where less is known about her views.
The former chairman of the Council of Economic Advisers in the Clinton administration, Yellen would also be the first Democrat to lead the Fed since Paul Volcker stepped down in 1987.
Obama, waylaid in Washington due to the government shutdown, will announce Yellen’s nomination at the White House on Wednesday afternoon. Obama and Yellen will be joined by outgoing Fed Chairman Ben S. Bernanke, who has resisted officially announcing his departure until a successor was named.
Financial analysts expect Yellen to continue the policies set forth by Bernanke, who has developed of series of unconventional measures to try to drive down unemployment in a stubbornly weak economy.
But while Bernanke continuously unveiled new stimulus, Yellen will face a different challenge, as many leading Fed officials believe it must begin to withdraw its extraordinary support for the economy in coming years.
Yellen’s nomination is expected to be approved by the Senate, where no serious opposition has surfaced, before Bernanke’s term expires at the end of January.
The White House had clearly signaled Yellen would be the nominee since Obama’s former economic adviser, Harvard professor Lawrence Summers, withdrew last month.
Summers, who was originally Obama’s favored candidate for the position, had to pull out after a vociferous reaction by liberal Democrats, who disliked his record on financial regulation and what they viewed as an uncivil style.
Yellen has alternated among jobs at the Fed, the White House and her academic home, the University of California, Berkeley, since the 1990s. She was president of the Federal Reserve Bank of San Francisco from 2004 to 2010, where she warned about dangers looming in the real estate market and was a participant in the Fed’s crisis response.
Obama nominated her to serve as Fed vice chairman under Bernanke. In that post, she has been a key force, pushing Bernanke and the rest of the Fed to embrace more aggressive policies to reduce unemployment, sometimes drawing concerns from officials and analysts worried that the efforts could overheat the economy and spark inflation.
In reality, the efforts have failed to reduce unemployment at a pace Fed officials have considered adequate.
Additionally, Yellen has been in charge of a major effort at the Fed to become more transparent through clearer communications of Fed intentions and thinking.
That more communicative style is one of Bernanke’s chief legacies.
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