US Senate confirms Janet Yellen as next Fed chief to succeed Bernake
07 January 2014
Janet Yellen has been confirmed to succeed Federal Reserve chairman Ben Bernanke, whose second four-year term expires on 31 January, becoming the first woman to run the Fed in its 100-year history and among a handful of women heading central banks globally.
Yellen, 67, a key figure in the Fed`s controversial quantitative easing or monetary expansion, an unprecedented effort to boost the US economy from the pitfalls of the 2008 financial crisis, on Monday received the final approval by the US Senate to lead the central bank at a time when it starts unwinding that stimulus.
The Senate voted 56-26 for Yellen, with massive support coming from the Democrats and many the Republicans voting against.
Yellen, currently the Fed`s vice chair, was among the QE's vocal supporters as the Fed cut overnight interest rates to near zero in late 2008 and has quadrupled its balance sheet to more than $4 trillion through a series of massive bond purchase programmes in a bid to push down longer-term borrowing costs and spur borrowing and investment.
Yellen, 67, spent years defending those efforts, both as Bernanke`s deputy and before that as head of the San Francisco Federal Reserve Bank.
The pumping of huge liquidity into the financial system to reduce borrowing costs and spur hiring and economic growth was seem widely as a prescription for disaster seen in the light of traditional policy that pares monetary expansion and low interest rate as inflation triggers.
However, at least in the Fed's cast, these policies appear to be working - US unemployment rate fell in to a five-year low of 7 per cent in November while the economy grew in the third quarter of 2013 at its fastest pace in almost two years.
Yellen is now tasked with navigating the economy through the growth path as the Fed phases out the monetary expansion.
Beginning with the reduction in Fed's monthly bond-buying from $85 billion to $75 billion this month, the QE3 programme - the Fed`s third such effort at so-called quantitative easing - will be closed by late 2014.
Yellen has years of experience as a top economic policymaker, including six years as chief of the San Francisco Fed and more than three years as the central bank`s No 2 official.
She also served on the Fed`s board in the 1990s when Alan Greenspan was chairman and as a top economic adviser to President Bill Clinton.
Yellen is a well-respected economics scholar and has taught at the Harvard University, the London School of Economics and the University of California, Berkeley.
Her research, some of it conducted with her Nobel-laureate husband George Akerlof, includes a variety of topics, extending from the rise in single motherhood to wage inflation and the negative effects of advertising.
Stanley Fischer, an American-Israeli and former head of Bank of Israel, is expected to be nominated as vice chair of Fed in place of Yellen.