Yellen becomes overwhelming favourite for Fed job after Summers bows out
Janet Yellen will become the first Chairwoman of the United States Federal Reserve next year, according to the overwhelming majority of economists surveyed by Bloomberg. Yellen became the front-runner for the job after former Treasury Secretary Lawrence Summers bowed out of contention earlier in the week. Current Fed Chairman Ben Bernanke will leave his post January 31, 2014, after two consecutive terms at the helm.
While many market participants expected Yellen to be the favourite all along, a September 6 survey by Bloomberg showed Summers was the front-runner, with almost 50 percent of economists saying he would be nominated. With Summers out of the running, 86 percent of economists expect Yellen to be the next Fed nominee. In addition to Summers and Yellen, the only other potential candidate mentioned by President Barrack Obama is former Fed Vice Chairman Donald Kohn.
The president hasn’t determined a timetable for announcing his choice, but said he would reach a decision sometime in the fall.
Yellen’s history with the Federal Reserve goes back more than 40 years, when she first served as an economist to the Fed’s Board of Governors. If selected, Yellen will be tasked with the unenviable job of ensuring the US economy doesn’t back-track once the Fed’s monetary easing program comes to a close. Since 2009, the central bank has pumped billions of dollars in to the US economy to spur employment and investment. The Fed’s record stimulus program is expected to come to an end sometime in mid-2014.
According to the Bloomberg survey, more than half of economists believe Yellen would be the best choice for Bernanke’s job. Kohn was second with ten percent. Kohn’s chances of succeeding Bernanke are considered slim. The only other candidate considered by economists was Roger Ferguson, Chief Executive Officer of TIAA-CREF.
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