Janet Yellen smiles as she is introduced as being the first female to be nominated as Federal Reserve Board chair, prior to testifying on Capitol Hill in Washington.
(Photo: Jacquelyn Martin, AP)
(USA TODAY) The Senate confirmed Janet Yellen as the next Federal Reserve chairman Monday, ensuring that the central bank's pro-growth policies since the Great Recession will likely continue.
The 56-26 vote for President Obama's nominee was largely along party lines in the Democratic-controlled Senate.
Yellen, 67, the Fed's vice chair since 2010, will become the first woman to head a major central bank when her four-year term begins Feb. 1. She will succeed Ben Bernanke, whose bold actions to pump money into the economy during the 2008 financial crisis are credited with helping the nation avoid a second Great Depression.
"Americans should feel reassured that we will have her at the helm of the Fed as our nation continues to recover from the Great Recession," Senate Banking Committee Chairman Tim Johnson, D-S.D., said in a statement.
Some Republicans have voiced concerns that Yellen's policies, which have focused on boosting economic and job growth, could eventually stoke inflation and the formation of asset bubbles. But the drama over whether Republicans would block her confirmation was removed in November when the Senate approved a historic rules change that allows presidential nominations to reach the floor with a simple majority, rather than 60 votes.
Carl Tobias, an expert on congressional politics and law professor at the University of Richmond, said "it's difficult to know" if Republicans voted against Yellen "on the merits of her candidacy. Or are they voting because they're still mad" about the rules change?
Yellen, who was raised in Brooklyn, N.Y., served on the Fed's board of governors in the 1990s. She has taught economics at the University of California-Berkeley, headed the president's Council of Economic Advisers during the Clinton administration and served as president of the San Francisco Federal Reserve Bank.
Yellen is considered one of the more "dovish," or pro-growth, members of the Fed's policymaking committee. But with the economy and job growth accelerating in the second half of 2013, Yellen supported the Fed's decision last month to start dialing down its monthly bond purchases, which are aimed at holding down long-term interest rates. At the same time, the Fed stressed that it will keep its benchmark short-term rate near zero "well past" the time that the unemployment rate, now 7%, falls to 6.5%.
Bernanke has said the Fed expects to taper the bond buying and halt it by the end of 2014, assuming the economy continues to advance. Yellen faces the challenging task of winding down the stimulus and shrinking the Fed's $4 trillion balance sheet gradually without derailing the recovery.
At the same time, she and other Fed officials must not move so slowly that a strengthening economy sets off inflation or asset bubbles.
"I think she's going to continue Bernanke's policy of focusing on making sure that the economy is fully recovered before" raising interest rates, says Michael Feroli, chief U.S. economist at JPMorgan Chase.
Yellen is also viewed as being able to marshal consensus on the Fed's policymaking committee, which has frequently expressed diverse views on the merits of the stimulus program.
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