Putting a bigger stamp on the central bank, US President Barack Obama is set to name Janet Yellen as vice chairwoman of the US Federal Reserve and fill two other vacancies on the board, which has enormous power over Americans’ pocketbooks.
The nominations are subject to US Senate approval. If the Senate confirms all three nominees, Obama will have appointed five of the seven members of the Federal Reserve Board.
Obama’s moves come as the Fed, whose decisions influence economic activity, employment and inflation, is facing political and economic challenges.
The Fed is steering the economy out of the worst recession since the 1930s, and legislation to overhaul the financial system would eliminate some of the Fed’s authority while giving it new responsibilities.
Some lawmakers think the Fed overstepped its authority by bailing out some big financial firms during the 2008 financial crisis.
DECISIONS
Fed interest rate decisions affect the rates consumers pay on home mortgages and other consumer and business loans.
On Wednesday, the Fed ended a two-day meeting by sticking to its pledge to hold rates at historic lows for an “extended period” to help energize the recovery.
The Fed offered a more upbeat view of the economy even as it noted that risks remain. It said the job market is “beginning to improve,” an upgrade from its last meeting in the middle of last month.
It observed then that the unemployment situation was merely “stabilizing.” The Fed also noted that consumer spending has “picked up,” an improvement from its last observation that spending was expanding at a “moderate pace.”
Even with the improvements, the Fed said there was reason to be cautious.
High unemployment, sluggish income gains and tight credit are still dampening consumer spending, a major contributor to economic activity.
Commercial real estate also remains fragile. And although housing activity has edged up, it is still at depressed levels. Moreover, bank lending continues to shrink.
NOMINEES
Yellen is president of the Federal Reserve Bank of San Francisco.
As vice chair, the second-highest ranking Fed official, her duties would include helping build support for policy positions staked out by Fed Chairman Ben Bernanke, who has begun a second term.
Obama also is expected to nominate Sarah Raskin and Peter Diamond to the Fed board. Raskin is the Maryland commissioner of financial regulation. Diamond is an economist at the Massachusetts Institute of Technology.
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