The announcement by president Barack Obama is scheduled for 3pm EST on Wednesday, the White House said. Both Yellen and the current Fed chair, Ben Bernanke, are expected to attend.
The nomination ends a long public debate about Obama's choice for Fed chairman. Yellen has long been seen as the frontrunner to succeed Bernanke, who is set to step down early next year. But she faced stiff opposition from former Treasury secretary Lawrence Summers who had strong support within the Obama administration. If approved by the Senate, she would be the first woman to head the central bank in its 100-year history.
Her appointment comes at a crucial moment for the Fed which is currently pumping $85bn (£52bn) a month into the US economy through an economic stimulus programme known as quantitative easing. Yellen has been seen as one of Bernanke’s key allies in the QE programme, which has split the Fed board with other members increasingly concerned about the impact of the massive bond buying programme.
Yellen’s appointment also comes as Congress argues over raising the US debt ceiling. Bernanke has consistently warned that failure to raise the US borrowing limit would have a severely negative impact on the country’s still fragile economic recovery.
The 67-year-old economist and Brooklyn native was appointed vice-chair of the Fed in October 2010. Previously she was president and CEO of the Federal Reserve Bank of San Francisco and also served as chair of the Council of Economic Advisors from 1997 to 1999.
An expert on the job markets, Yellen has been a staunch ally of Bernanke as he has tried to use low interest rates and the QE programme to reanimate the US’s still lackluster job market. Her appointment comes after Summers announced he was withdrawing his candidacy for the position.
Summers had been seen as the Obama administration’s favoured candidate. But his candidacy ran into opposition from Democrats unhappy with Summer’s history as a champion of financial deregulation ahead of the financial crisis.
Charles Geisst, finance professor at Manhattan College and author of Wall Street: A History, said Bernanke’s successor would have some tough comparisons to live up to. The current Fed chairman has served since 2006 and was appointed by Obama’s predecessor George W Bush. He has been Fed chairman during some of the most turbulent economic periods in US history. “Bernanke will probably go down in history as the man who saved the world’s financial system,” said Geisst.
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