Yellen takes big step toward becoming next Fed chair

Thu Nov 21, 2013 3:25pm EST
 
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By Alister Bull and Margaret Chadbourn

WASHINGTON (Reuters) - Federal Reserve Vice Chair Janet Yellen moved closer on Thursday to becoming the first woman to lead the U.S. central bank after a Senate committee backed her nomination and the chamber changed its rules to make it easier for nominees to be confirmed.

Once she wins Senate approval, Yellen will replace Fed Chairman Ben Bernanke when his term expires on January 31 and become the most powerful woman in world finance.

Her nomination moved easily through the Senate Banking Committee on a 14-8 vote. It now goes to the full Senate, which is expected to grant its approval next month.

Yellen, 67, was already widely expected to win confirmation, but her path became even clearer when Senate Democrats forced through a rule change that lowered the votes needed to overcome procedural roadblocks on most presidential appointments to 51 from 60. Democrats control 55 of the chamber's 100 seats.

Nominated by President Barack Obama, Yellen is viewed as a monetary policy dove more concerned about the costs to society of high unemployment than about the risk aggressive actions to lower it will ignite inflation or fuel asset bubbles.

The highly acclaimed economist will preside over a central bank that has taken dramatic and unconventional steps to spur economic growth, and which is now wrestling with a decision on when to scale back a bond-buying program that has sought to drive down long-term interest rates.

The Fed has held overnight rates near zero since late 2008 and has quadrupled the size of its balance sheet to $3.9 trillion through three massive asset purchase campaigns. It is currently buying $85 billion in bonds a month.

Both Yellen and Bernanke have emphasized in recent days that the Fed will keep interest rates low for some time even after it winds down its asset purchases, remarks that have bolstered expectations of policy continuity at the central bank.   Continued...

 
U.S. Federal Reserve Vice Chair Janet Yellen stands after testifying during a confirmation hearing on her nomination to be the next chairman of the U.S. Federal Reserve before the Senate Banking Committee in Washington November 14, 2013. REUTERS/Joshua Roberts