After a lengthy and politically charged search, US President Barack Obama has decided to nominate US Federal Reserve Vice Chairwoman Janet Yellen to succeed Fed Chairman Ben Bernanke at a pivotal time for the US economy.
If confirmed by the US Senate, Yellen would be the first woman to head a major central bank anywhere in the world.
Yellen would also be the first Democrat to lead the US central bank since former Fed chairman Paul Volcker was picked by then-US president Jimmy Carter in 1979.
Obama was scheduled to make the announcement yesterday with Yellen and Bernanke at his side in the White House’s East Room.
Bernanke, 59, will serve until his term ends on Jan. 31, completing a remarkable eight-year tenure in which he helped pull the US economy out of the worst financial crisis and recession since the 1930s.
Yellen, 67, emerged as the top candidate after Lawrence Summers, a former US Treasury secretary and White House favorite for the job, withdrew from consideration last month due to rising opposition.
A close ally of Bernanke’s, Yellen has been a key architect of the Fed’s efforts to keep interest rates near record-lows to support the economy and would likely continue steering Fed policy in the same direction as her predecessor.
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 asset bubbles.
Democratic Senator Tim Johnson, who heads the Senate Banking Committee that must approve Yellen’s nomination, said he would work with the panel’s members to advance her confirmation quickly.
“She has a depth of experience that is second to none and I have no doubt she will be an excellent Federal Reserve chairman,” Johnson said in a statement.
Yellen drew outspoken support from Senate Democrats, one-third of whom signed a letter this summer urging Obama to choose her.
This month, more than 350 economists also signed a similar letter of support to Obama.
While some economists see Obama’s choice of Yellen as a strong signal of continuity at the Fed, others said the difficult job of unwinding all of the Fed’s support without causing major financial market upheavals would fall on her.
At the Fed, Yellen has built a reputation as a “dove” — someone typically more concerned with keeping interest rates low than raising them to avert high inflation.
Still, Yellen has said that when rates need to be raised to prevent high inflation as the economy picks up, she will move in that direction.