Janet Yellen: The Fed’s first Chairwoman?
It is becoming increasingly likely Ben Bernanke will not reprise his role as Chairman of the US Federal Reserve. Bernanke’s decision to skip the keynote address at this year’s Jackson Hole summit of world central bankers is a sign he’s ready to move on. But perhaps more interesting than his decision to skip the August summit is who is taking his place as keynote speaker: none other than Janet Yellen.
Janet Yellen is widely believed to be in the running for Ben Bernanke’s job as the next Chair of the US Federal Reserve. Currently serving as Vice Chairwoman to the central bank, Yellen is already second-in-command, and perhaps the most suited to replace the overextended Bernanke. Prior to her name being thrown in the running, very little was known about Yellen. What we do know is she’s a methodical economist who had the foresight to predict the sub-prime mortgage crisis as early as 2005.
Yellen has rubbed elbows with some of America’s academic elite, having served as Assistant Professor at Harvard University. Since 1980, she has been involved in research and teaching at the University of California, Berkley, where she now serves as Professor Emeritus.
Her history with the Federal Reserve dates back to the 1970s, when she served as an economist to the Federal Reserve Board of Governors. In the late-1990s she was the Chair of President Clinton’s Council of Economic Advisers, before serving as President and CEO to the Federal Reserve Bank of California between 2004 and 2010. She has served as Vice Chair of the Fed since 2010, and has been a voting member of the FOMC since 2009.
What can market participants expect from Yellen? Like a prototypical Keynesian, unemployment trumps inflation as her primary concern, making her less likely to support interest rate hikes. With regards to the current state of US monetary policy, Yellen finds the following five variables informative: the unemployment rate, payroll employment, hiring, quit rate and economic growth.
Yellen’s appointment would make her the first woman to ever head the US Federal Reserve. It would also make her the most powerful woman in the world.
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