Obama names Yellen as next Federal Reserve chair

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Obama names Yellen as next Federal Reserve chair

(Xinhua) 10:04, October 10, 2013

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U.S. President Barack Obama and current Fed Chairman Ben Bernanke listen as Janet Yellen (C), the current Federal Reserve Vice Chairwoman, speaks in the State Dining Room of the White House in Washington D.C., Oct. 9, 2013. Obama on Wednesday formally nominated current Federal Reserve Vice Chairwoman Janet Yellen to be the next Fed chief. (Xinhua/Zhang Jun)

WASHINGTON, Oct. 9 (Xinhua) -- After months of bitter debates, U. S. President Barack Obama on Wednesday finally nominated current Federal Reserve Vice Chairwoman Janet Yellen to be the next Fed chief and replace the outgoing Fed Chairman Ben Bernanke.

Obama said on Wednesday at a White House nomination ceremony that Yellen is committed to job creation in the United States and choosing Yellen as the head of the central bank is one of the most important decisions for him to make.

"I considered a lot of factors. Foremost among them is an understanding of the Fed's dual mandate: sound monetary policy to make sure that we keep inflation in check, but also increasing employment and creating jobs, which remains our most important economic challenge right now. And I found these qualities in Janet Yellen," Obama said, flanked by Yellen and Bernanke.

Janet is renowned for her good judgment, Obama said, adding that she sounded the alarm early about the housing bubble, about excesses in the financial sector and about the risks of a major recession.

"She doesn't have a crystal ball, but what she does have is a keen understanding about how markets and the economy work, not just in theory, but also in the real world," he said.

If confirmed by the Senate, Yellen would be the first woman to lead the U.S. central bank in its 100-year history. Bernanke is poised to step down in January 2014.

"Janet also knows how to build consensus. She listens to competing views and brings people together around a common goal," Obama added.

Yellen became the front-runner for the top job after former Treasury Secretary Lawrence Summers, a close adviser of Obama, withdrew last month from the race.

"If confirmed by the Senate, I pledge to do my utmost to keep that trust and meet the great responsibilities that Congress has entrusted to the Federal Reserve -- to promote maximum employment, stable prices, and a strong and stable financial system," Yellen said at the ceremony.

Yellen's nomination has received a warm welcome. "President Obama has made an outstanding choice in nominating my colleague and friend Janet Yellen to chair the Federal Reserve Board. Janet is exceptionally well qualified for the position, with stellar academic credentials and a strong record as a leader and a policymaker," Bernanke said in a statement.

"I welcome President Obama's nomination of Janet Yellen for the Fed Chair. Janet is an excellent choice for this very important position. I look forward to continuing to work with her," International Monetary Fund (IMF) Managing Director Christine Lagarde said Wednesday in another statement.

However, U.S. Senate's number two Republican John Cornyn has already voiced his opposition to the nomination, as some Republican lawmakers were not satisfied with the Fed's quantitative easing moves.

"Yellen subscribes to the liberal school of thought that the best way to handle to our nation's fiscal challenges is to throw more money at them. This stimulus obsession is the reason the nation finds itself in the fiscal calamity it does today, and the last thing we need is a leader at the helm of the Federal Reserve who is intent on more quantitative easing that harms our economy and further burdens hard-working Americans," Cornyn said.

Since the onset of the financial crisis, the Fed has kept its short-term interest rate at the historically low level and completed two rounds of quantitative easing programs, known as QE1 and QE2. It is now purchasing longer-term government debt and mortgage-backed securities (MBS) at a pace of 85 billion U.S. dollars per month, dubbed as the QE3.