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October 09, 2013

Yellen Appointment to Head US Central Bank Wins Overseas Praise

by VOA News

The appointment of Janet Yellen to head the powerful U.S. central bank is winning praise on the international front.

U.S. President Barack Obama is set Wednesday to name the 67-year-old Yellen as head of the Federal Reserve after her three-year stint as vice chair.

She would become the first woman to lead the central bank, which often sets the path for international monetary policies and helps shape economies throughout the world. She has been a staunch supporter of policies adopted by retiring Fed chairman Ben Bernanke to keep interest rates low and pump money into the U.S. economy to help it recover from its worst downturn since the Great Depression of the 1930s.

Financial counselor Jose Vinals at the International Monetary Fund said that based on Yellen's academic credentials and background, he could not "think of anybody who is better prepared" to lead the bank.

Japan's chief cabinet secretary, Yoshihide Suga, said that Yellen, along with Bernanke, successfully led world economies out of the recession sparked by the 2008 collapse of the U.S. investment bank Lehman Brothers.

"Our thinking is that she is on an everyday basis a very talented individual," said Suga.

One analyst in the U.S., Cornelius Hurley of the Boston University Center for Finance, Law & Policy, told VOA he expects Yellen to win easy confirmation in the Democratic-controlled U.S. Senate. But he said that Republican opponents of Obama and Federal Reserve policies are likely to question her sharply about the Fed's extensive intervention in the American economy in the last few years.

Hurley said it was a milestone that a woman would head the central bank, but more important that she is unlikely to advocate any sharp shift in policies as the U.S. economy slowly gains strength.

"I think there will be a smooth transition. Obviously, she's been vice chairman since 2010 and she's worked very closely with Chairman Bernanke," said Hurley.

But Hurley said that other new officials are joining the 12-member Fed group that sets monetary policy for the U.S. in the coming weeks and could be less inclined to support continued measures to boost the U.S. economy, the world's largest.

"She's going to face a decidedly more hawkish FOMC, the 12-member FOMC, that's the Federal Open Markets Committee, than Chairman Bernanke has right now," he said.

The U.S. government is in the midst of a nine-day partial shutdown and facing a contentious debate on raising its current $16.7 trillion borrowing limit before October 17 so it does not default on its financial obligations. As a result, Hurley said much could change before Yellen could become head of the Fed on February 1 next year.

If confirmed by the Senate, Yellen would serve a four-year term.