President Barack Obama has nominated Janet Yellen as chair of the US Federal Reserve, the most powerful central banker in the world. Yellen, 67, the first woman to take the job, will replace Ben Bernanke in January and serve for four years. The current vice-chair of the central bank has spent two decades as a key figure at the Fed.
What the commentators said
This is no surprise, said Daniel Indiviglio on Breakingviews. She has been the favourite for the job ever since Obama’s first choice, Larry Summers, dropped out of the race. Even before that, many observers deemed her the better-qualified candidate. The timing of this appointment, however, looks designed “to calm the market”. Given the ongoing, and gradually worsening, jitters over the debt ceiling, “a little certainty is what global investors need from a politically chaotic Washington”.
“You could hardly find a safer pair of hands,” said Ambrose Evans-Pritchard on Telegraph.co.uk. Her experience stretches back to the Asian crisis, while she got the big calls right in recent years. She pushed for interest rate rises in 1996 to head off inflation and wean the economy off cheap credit. Overruled then, she was “quick to sense the danger” to the banking system from the subprime implosion. She later sided with inflation sceptics and backed quantitative easing, which also seems to have been a good call, said Evans-Pritchard. Core inflation in America is close to a 50-year low.
Yellen’s approach is a little more doveish than Bernanke’s, noted Capital Economics, so the upshot is that there is now a marginally greater chance that the Fed will fail to tighten monetary policy enough as the recovery gathers momentum, allowing inflation off the leash. For now, however, what she does or doesn’t do “seems somewhat academic”, said Jeremy Warner on Telegraph.co.uk. If the US government defaults there will almost certainly be a global recession regardless of the Fed’s actions.
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