By Hazel Bradford, Crain News Service
WASHINGTON (Oct. 9, 2013) — President Barack Obama nominated Janet Yellen on Oct. 9 to chair the Federal Reserve when the term of current Chairman Ben S. Bernanke ends in January.
The appointment is being viewed as largely a continuation of monetary policies set under Mr. Bernanke's leadership, which include an $85 billion-per-month bond purchase program and low federal funds rate while key economic indicators show little improvement.
"We would expect Janet Yellen to approach the daunting task of winding down an era of ultra-loose monetary policies in a similar fashion as her predecessor — with caution," Russ Koesterich, BlackRock (BLK) managing director and global chief investment strategist, said in a BlackRock Investment Institute statement.
"We continue to believe that the Federal Reserve could begin tapering its $85 billion-a-month bond purchasing program as soon as December and that its pace will likely be slow, and dependent on the strength of the U.S. economy." Mr. Koesterich said in the statement.
Mr. Koesterich and other economists expect Ms. Yellen to continue to worry more about employment rates than inflation, which means little prospect of interest rate hikes until 2015.
Senate Banking Committee Chairman Tim Johnson, D-S.D., in a statement commended the president for naming the first female leader in Federal Reserve history, and praised Ms. Yellen for "a depth of experience that is second to none."
Ms. Yellen, who became vice chairwoman in 2010, was president of the San Francisco Federal Reserve Bank and head of the White House Council of Economic Advisers during the Clinton administration. Mr. Johnson pledged to move her nomination forward for Senate approval.
House Financial Services Committee Chairman Jeb Hensarling, R-Texas, who has criticized Fed officials over recent stimulus measures "that have camouflaged the true cost of our deficit" and favored wealthy investors who can make riskier investments, nonetheless praised Ms. Yellen for her past comments about adopting a more rules-based monetary policy. "It is my hope that, if confirmed, she will lead the Federal Reserve to adopt a more transparent and rules-based monetary policy that aims for price stability and long-term growth," Mr. Hensarling said in a statement.
This report appeared on pionline.com, the website of Pensions & Investments magazine, a Chicago-based sister publication of Tire Business.