Obama to formally nominate Yellen as Federal Reserve chief

Obama to formally nominate Yellen as Federal Reserve chief

WASHINGTON - President Barack Obama will nominate Janet Yellen Wednesday as the first female head of the US Federal Reserve, at a time when raging political turbulence is imperiling the fragile US economy. Obama will put forward Yellen for a four-year term at a White House event at 1900 GMT also attended by outgoing Fed Chairman Ben Bernanke, a US official said Tuesday.

Yellen, currently a vice chair of the US central bank, emerged as favourite for the post after another possible pick, former Treasury secretary Lawrence Summers, pulled out of the running due to opposition from Obama's Democratic allies in the Senate.

The 67-year-old sits in the middle of the Fed "doves" - those focused on stimulating the economy back to full employment and, not yet at least, worried about the specter of easy money sparking uncontrollable inflation.

But one of her first tasks as Fed chief, if confirmed by the Senate, will be to judge how quickly to taper off the monetary stimulus policies that the Fed had earlier appeared set to ease by the end of the year. Economists and markets had widely expected the $85 billion a month quantitative easing programme to be scaled back after September's Federal Reserve Open Market committee (FOMC) meeting.

But a worsening of some key economic indicators, as well as political battles over economic policy in Washington, had raised concerns. Yellen has spent more than a dozen years altogether at the Fed in various positions, including the last four years as vice chair. She would be the central bank's first female chief.

She will begin to prepare for her confirmation hearings at a time of stark partisanship in Washington, with Obama and Republicans facing off over the need to lift the US debt ceiling and a government shutdown.

Summers, who served as a key White House economic advisor in the crisis-marred initial few years of Obama's first term, had run into trouble over his record on policy while a member of the Clinton administration in the 1990s and for a supposedly abrasive personality.

In particular, three Democratic senators on the Senate Banking Committee, the first stop for congressional approval, raised questions about Summers having driven the banking deregulation that led directly to the financial crisis, and about his alleged closeness to Wall Street.

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