|Cheyenne Hopkins and Joshua Zumbrun|
Obama will announce the nomination at
Obama turned to Yellen, vice chairman of the Fed since 2010, after the other leading candidate, former Treasury secretary and
“She’s an excellent choice, and I believe she’ll be confirmed by a wide margin,”
U.S. index futures climbed, signaling stocks may rebound from the biggest loss since August, and Treasuries rose after the announcement. Standard & Poor’s 500 Index futures added 0.3 percent as of
International Monetary Fund Managing Director
The president’s choice followed a polarizing and unprecedented public contest for a nomination that Obama described in August as one of the most important decisions of his presidency. Yellen was the favorite in surveys of economists and had the backing of 20 members of the Senate Democratic caucus who signed a
As a top deputy to Bernanke, Yellen supported the central bank’s unprecedented bond buying programs and was a driving force behind a new strategy adopted in 2012 to commit the central bank to goals on inflation and unemployment.
“It’s hard to imagine a better choice by virtue of intelligence, temperament, demonstrated good judgment, understanding of the Fed, and extensive experience,” said
Summers also welcomed the decision, saying that “Janet Yellen is a terrific choice to lead the Federal Reserve. I have admired and learned from her ever since she taught my first macroeconomics graduate class in 1976,” he said in an e-mail.
As the Fed’s No. 2 official, she has articulated the case for maintaining highly accommodative monetary policy. In a series of 2012 speeches, she outlined why interest rates could remain near zero into late 2015, and in a 2011 speech she justified the Fed’s first two rounds of large-scale asset purchases with an estimate that the programs would create 3 million jobs.
“She’s even more of a dove than Bernanke is, but there’s nobody who can say she’s not credentialed because of the range of experience she’s got,” said
Among Yellen’s tasks, if confirmed, will be to execute the unwinding of the Fed’s record monetary stimulus. Bernanke has said the central bank won’t end monthly bond purchases until the labor market shows sign of substantial improvement.
The Fed has also announced plans to hold short-term interest rates near zero until the unemployment rate reaches at least 6.5 percent.
“She comes from inside the Fed, so is experienced,” former European Central Bank President
A member of the Fed’s
As Fed vice chairman, Yellen’s attentiveness to the district Fed presidents proved invaluable in building consensus on policy issues.
When the Federal Open Market Committee gathers in
“She’s steeped in the culture,” said Eisenbeis, now chief monetary economist at
She took control of a subcommittee focused on the Fed’s communication challenges. For years, policy makers on the FOMC had been unable to agree to holding press conferences or spelling out goals for inflation and unemployment.
Yellen’s subcommittee met almost as often as the FOMC — 15 times in person and via telephone in 2011 and 2012 — according to her calendars. The meetings culminated in a breakthrough in policy: A
Yellen earned her Ph.D. in economics at
Her road to the top of the central bank began in 1976 after she failed to get tenure at
There she met her husband,
They specialized in the labor market and were co-authors of more than a dozen papers that delved into the mechanics of how people switch jobs and what it means when workers perceive their wages as unfair.
In 1994, Yellen and Akerlof’s career paths diverged. While he went on to win the Nobel Prize in Economics, Yellen was appointed by President
She served as the chairman of Clinton’s
Yellen returned to
“She assures continuity on the one hand and on the other hand is exquisitely qualified,” said
When Yellen became vice chairman of the Fed in 2010, she passed the
Yellen became San Francisco Fed president in
Transcripts from meetings of the central bank in 2007, not released until earlier this year, show that Yellen was among the first Fed policy makers to warn how severe the housing situation was becoming.
GORILLA IN THE ROOM
At the next meeting, on
“The risk for further significant deterioration in the housing market, with house prices falling and mortgage delinquencies rising further, causes me appreciable angst,” Yellen said. “Rising defaults in subprime could spread to other sectors of the mortgage market and could trigger a vicious cycle.”
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