Obama says new Fed chair should focus on employment, inflation

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Obama says new Fed chair should focus on employment, inflation

(Xinhua) 13:12, August 10, 2013

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U.S. President Barack Obama said Friday that he was considering "a range of" candidates to be the next chairperson of the Federal Reserve, and that the new chief should endeavor to bolster job creation and keep inflation in check.

Obama said he has a range of "highly-qualified" candidates under consideration to replace outgoing chairman Ben Bernanke, including Lawrence Summers, a former treasury secretary, and Janet Yellen, currently the central bank's vice chairwoman.

Summers and Yellen are now widely considered as the front- runners for the Fed chair.

The new Fed chief should understand the central bank has a dual mandate to control inflation and foster employment, Obama said at a White House press conference.

"A critical part of the job is making sure that we keep inflation in check, that our monetary policy is sound, that the dollar is sound," he said.

The other mandate is full employment, he said, saying "the challenge is we've still got too many people out of work, too many long-term unemployed, too much slack in the economy, and we're not growing as fast as we should."

The U.S. economy grew at a 1.7 percent annualized rate in the second quarter of this year after expanding at a sub-par rate of 1. 1 percent in the first quarter. The U.S. unemployment rate hovered at 7.4 percent.

As Summers has been attacked by a group of lawmakers, Obama used the platform to defend his former top economic aide, saying he has done a good job. Summers served as the head of the National Economic Council during Obama's first term and treasury secretary under former President Bill Clinton.

The president acknowledged that many think Summers has "an inside track" to the job after Obama defended him at a closed-door meeting with House Democrats last week. But Obama said he was standing up for Summers because he was "getting slapped around in the press for no reason."

"The perception that Mr. Summers might have an inside track simply had to do with a bunch of attacks that I was hearing on Mr. Summers preemptively, which is sort of a standard Washington exercise that I don't like," Obama said.

The president said he would nominate the next Fed chief "in the fall" to succeed Bernanke, whose second four-year term ends in January.

Choosing the next Fed chief is definitely "one of the most important economic decisions" that he will make in the remainder of his presidency. The Fed chair is not only one of the most important policymakers in the United States, but also one of the most important policymakers in the world, Obama said.

A group of Senate Democrats sent a letter to Obama last month, urging him to nominate Yellen who they called "the best person" to replace Bernanke. The president's choice would have to be confirmed by the Senate.

Prior to the looming budget wrangles between Democratic and Republican lawmakers this fall, which might possibly lead to a government shutdown, Obama cautioned that shutting down the government is "not a good idea", as the U.S. economy and housing market are embarking on improvement.