Senate confirms Yellen as US Fed chair

WASHINGTON DC, USA (UPDATED) – The US Senate confirmed Federal Reserve vice chair Janet Yellen to be the new head of the world’s most powerful central bank Monday, January 6, the first woman ever to lead the Fed.

President Barack Obama’s nominee earned bipartisan support in the bitterly divided chamber, but the 56-26 vote was still among the closest in the 100-year history of the institution.

Yellen replaces predecessor Ben Bernanke, who steps down on January 31 after eight years in the job.

At 67, Yellen has built a strong reputation as an academic economist, and as a veteran policymaker at the Fed she is not expected to veer far from the central bank’s existing policies.

Married to economics Nobel Prize winner George Akerlof, she has a long-term interest in the impact of joblessness on the economy, and has helped keep Fed policy focused on bringing down the unemployment rate.

She has also been closely identified with the Fed’s opening up of its once-mysterious policy thinking, with the central bank communicating what it sees in the economy and the expected direction of monetary policy far more openly than 10 years ago.

“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,” said Senate Banking Committee chairman Tim Johnson.

“Dr. Yellen’s leadership will also be critical as the Fed completes Wall Street reform rulemaking and continues to enhance the stability of our financial sector.”

But Yellen encountered resistance from several Republicans concerned with what the described as the Fed’s policy of “easy money.”

As a result of such policies, “the Fed has seen its balance sheet more than quadruple, from $800 billion to more than $4 trillion,” said veteran Senate Republican Chuck Grassley.

“The stock market has become addicted to the Fed’s easy money policies,” he added. “It appears that Ms. Yellen will continue to pursue these misguided policies.”

The central bank announced last month it would start tapering its massive stimulus program in January, giving a vote of confidence in the recovery of the US economy and job market.

The Fed will buy $75 billion of bonds per month, down from the $85 billion monthly asset purchases it has made for a year.

Her nomination was contentious even among some Democrats, including Joe Manchin of West Virginia, who had been “troubled by the unchecked quantitative easing policies” of the Fed.

“In light of recent news that the Fed will begin to taper its easing by ten billion dollars a month starting in January, I now feel comfortable supporting Vice-Chair Yellen’s nomination,” he said in a statement. – Rappler.com