In a few hours, the White House is expected to announce the nomination of Janet Yellen, currently the Vice Chairwoman of the Fed, as the next head of the Federal Reserve. Here are 8 things you probably didn’t know about Ben Bernanke’s likely successor.
1. If confirmed, Janet Yellen will be the first female Fed head in its 100-year history.
She will also be the first Democrat to fill up the post since Paul Volcker left in 1987.
2. She specializes in inflation and unemployment issues.
In 1996 she famously debated then Fed Chairman Alan Greenspan over the right inflation target. She argued that an ultra-low inflation could harm the economy as much as high inflation could.
She also believes that the Fed should be more aggressive in bringing down unemployment since inflation isn’t likely to balloon given the current economic conditions.
3. She has the best track record in predicting growth, jobs, and inflation.
This isn’t surprising given the point above. A Wall Street Journal report tracked more than 700 predictions, speeches, and Congressional testimony made by 14 Fed policymakers from 2009 to 2012 and found that Yellen has produced the most accurate forecasts.
4. She has warned of the real estate bubble as early as 2005.
Back when she was San Francisco Fed President Yellen gave a speech that warned that house prices are “abnormally high” and that there’s a “bubble element” even accounting for the factors that support the high prices. +1 for her forecasting scores!
5. She is one of the driving forces behind the Fed’s recent policy changes.
According to the Fed’s transcripts, Yellen has been calling for aggressive stimulus measures since December last year. It wasn’t until a couple of months later that the Fed pledged to keep rates near zero with targets for inflation and unemployment.
6. She has experience in communicating the Fed’s plans to the public.
In 2010 Bernanke had asked Yellen to lead an internal communications committee that articulates the central bank’s goals to the public.
She also supports the Fed’s transparency, saying that “The effects of monetary policy depend critically on the public getting the message about what policy will do months or years in the future… I hope and trust that the days of ‘never explain, never excuse’ are gone for good.”
7. She prepares well for her meetings.
Who doesn’t, right? However, more than a few Fed insiders have noted her thoroughness in her preparations. For example, back in April she had prepared a 20-page speech complete with 18 footnotes and 15 charts to argue the case for low interest rates. She’s also been known to speak concisely and directly.
8. She is married to a Nobel Laureate.
In 1978 she married George Ackerlof, who won the 2001 Nobel Prize in Economics. Their dinner conversation would probably be like “How’s inflation these days, dear?” “It’s fine. We bought more bonds today. Please pass the salt.”
There you have it, folks! It looks like the next Fed head is all about inflation, unemployment, low interest rates, and girl power. In the wise words of Alicia Keys, “This girl is on fire!”
How do you think Yellen’s leadership will affect the Fed’s monetary policy and the U.S. dollar? Let us know by voting through the poll below!