Ben Bernanke is to step down as Chairman of the Federal Reserve after eight years at the helm of America’s central bank. The 59 year old will step aside in January, so naturally there has been much speculation as to who will succeed him. Initially, the front runner was former Treasury secretary, Larry Summers, but he withdrew his candidacy after opposition from some liberal Democrats. In the event, President Obama has nominated a Federal Reserve vice chairman, 67 year old Janet Yellen. She has served as vice chairman of the Fed for two years.
Janet Yellen needs to win support from the Senate for her nomination to be approved which will require support from six Republicans if all of the Democratic Senators support their president’s nominee. It is widely expected that her nomination will be approved.
Janet Yellen is perceived as being close in approach to her predecessor, so if approved, it is unlikely that the policies of the Federal Reserve would change noticeably. She has attracted the ire of conservative Republicans for her “dovish” stance on inflation. Her position is that control of inflation should be secondary to boosting employment. If she wins approval, she has promised “to promote maximum employment, stable prices and a stable financial system”.
Ms Yellen has served in a number of senior administrative positions in America and held academic positions at the London School of Economics, Harvard University and the University of California at Berkley. Democrats are expecting her attitude towards Wall Street to be more sceptical than Mr Bernanke’s.
There has still been no sign of an accommodation over the budget impasse which has shutdown parts of the US government, but President Obama has invited Republican members of Congress for talks, but neither side seems ready to give ground. The Republicans want concessions over Obamacare, but the President has refused to give in to extortion and requires a “clean” budget as a precursor to full discussions on all aspects of fiscal policy.