US Senate confirms Janet Yellen as new Federal Reserve chairman

Janet Yellen becomes the first woman to head the world's most powerful central bank

PUBLISHED : Wednesday, 08 January, 2014, 12:29am
UPDATED : Wednesday, 08 January, 2014, 1:29am

The US Senate has confirmed Janet Yellen as new leader of the Federal Reserve, making her the first woman to head the world's most powerful central bank.

President Barack Obama's nominee earned bipartisan support in the divided chamber, but the 56-26 vote was still among the closest in the 100-year history of the institution.

Several senators who supported Yellen, currently the Fed's vice-chairman, arrived too late for the vote.

Yellen, 67, will replace the current chairman, Ben Bernanke, who steps down on January 31 after eight years in the job. During that time, the pair dealt with the country's worst economic crisis since the Great Depression of the 1930s.

The main task of Bernanke's successor will be ensuring the US economy does not slip backwards at a time when other countries are beset by weakness.

Especially crucial will be further pushing down the American jobless rate, which fell to 7 per cent in November, still higher than what Bernanke, Yellen and other Fed policymakers have deemed satisfactory.

Obama cheered the Senate approval, saying Yellen would serve the central bank and the country well.

"The American people will have a fierce champion who understands that the ultimate goal of economic and financial policymaking is to improve the lives, jobs and standard of living of American workers and their families," he said.

Married to economics Nobel Prize winner George Akerlof, Yellen has a long-term interest in the impact of joblessness on the economy, and has helped keep Fed policy focused on bringing down unemployment.

The American Bankers Association, which has fought the Fed's push for tough regulations in the wake of the 2008 crisis, cautiously welcomed Yellen's approval.

"As the Federal Reserve heightens its focus on bank regulation, her experience supervising banks in the Federal Reserve system provides her with a valuable perspective. We look forward to working with the Federal Reserve under her leadership."

Her nomination encountered resistance from several Republicans concerned by the Fed's efforts to pump money into the economy over the past four years, including its US$85 billion a month bond-buying stimulus programme of the past year.

However, with the economy now growing at a pace the Fed has tentatively ruled sustainable, the policymaking Federal Open Market Committee decided at its December meeting to taper the programme. The step convinced Democratic Senator Joe Manchin, who had been concerned about the size of the stimulus, to back Yellen.