Obama Makes Janet Yellen His Official Choice To Head The Fed

Janet Yellen is President Obama's choice to replace Ben Bernanke at the Federal Reserve. The announcement came Wednesday afternoon. If confirmed by the Senate, Yellen will be the first woman to lead the Fed.

Copyright © 2013 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

MELISSA BLOCK, HOST:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

ROBERT SIEGEL, HOST:

And I'm Robert Siegel.

President Obama has nominated Janet Yellen to chair the Federal Reserve. If she's approved by the Senate, she will be the first woman to lead the nation's central bank, and she would succeed Ben Bernanke in January. Yellen is a long-time Fed official who played a key role in the bank's efforts to revive the economy. Yellen said today there has been progress on that front, but that the Fed needs to keep working to improve the job market. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: Janet Yellen may not have been President Obama's first choice to head the Fed. That was widely thought to be former Treasury Secretary Larry Summers, who withdrew from contention amid strong opposition last month. But when the president finally got around to nominating Yellen, he had nothing but praise for her. She is, he said, one of the country's foremost economists and policymakers, someone who saw the financial crisis coming early on.

(SOUNDBITE OF PRESS CONFERENCE)

PRESIDENT BARACK OBAMA: She doesn't have a crystal ball, but what she does have is a keen understanding about how markets and the economy work, not just in theory but also in the real world.

ZARROLI: Obama suggested he picked Yellen because she understands the central bank's dual mandate. It doesn't just try to control inflation, it's also supposed to promote a strong job market. When her turn came to speak, Yellen said the U.S. economy has come a long way since the financial crisis and ensuing recession.

(SOUNDBITE OF PRESS CONFERENCE)

JANET YELLEN: We have made progress. The economy is stronger and the financial system sounder.

ZARROLI: But, Yellen said, the past six years have been a challenging time for many Americans and more needs to be done to strengthen the economy.

(SOUNDBITE OF PRESS CONFERENCE)

YELLEN: And too many Americans still can't find a job and worry how they'll pay their bills and provide for their families. The Federal Reserve can help if it does its job effectively.

ZARROLI: If Yellen is approved, she'll preside over a central bank that has spent years navigating through a tumultuous economic downturn. The Fed has responded by cutting short-term interest rates to historic lows. And when that wasn't enough, it took some extraordinary measures, buying up vast amounts of Treasury bonds and other securities as a way of bringing down longer-term rates. The economy has gradually improved, leaving the Fed in something of a dilemma. Victor Li is a professor of economics at Villanova University.

VICTOR LI: It's a very critical time in the sense that the Fed has expanded their balance sheet by so much. So the real challenge right now is to think about the appropriate exit strategy.

ZARROLI: Under Bernanke, the Fed has so far refused to reverse course and begin tapering off its bond purchases. And Li says Yellen probably shares his hesitation.

LI: She may, given the current situation, decide that tapering might come later as opposed to sooner. But generally, I think they share very similar views in terms of balancing the risks between inflation versus recession.

ZARROLI: But Li says there are people within the Fed and elsewhere who want to slow down the bond purchases because they worry that higher inflation will result. Republican Senator Bob Corker of Tennessee spoke on CNBC today.

(SOUNDBITE OF TV SHOW, "SQUAWK BOX")

SENATOR BOB CORKER: I want to understand, you know, how she expects to get out of the trade, why there wasn't tapering that took place, when will it take place. And I want to make sure that she doesn't view herself as an enabler of bad policy within the Congress itself.

ZARROLI: It's not clear how many senators will ultimately oppose Yellen. Bernanke faced similar skepticism when he was re-appointed five years ago, but he managed to survive. And as long as higher inflation remains more theory than fact, it may be tough to build a case against Yellen as well. Jim Zarroli, NPR News.

Copyright © 2013 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.