Yellen is widely expected to be confirmed to a 4-year term as the first woman chair of the Federal Reserve.
She is currently serving as the Vice Chair of the Board of Governors of the Federal Reserve System and is a voting member of the Federal Reserve.
In mid-September after it was confirmed that Lawrence Summers was no longer seeking to succeed Chairman Ben Bernanke due to political resistance, Yellen was considered to be the next top pick.
On October 9, 2013 in the midst of the partial U.S. federal government shutdown, President Barack Obama nominated Yellen to become the next chair of the Federal Reserve, calling her “renowned for her good judgment” and “exceptionally well qualified for this role.”
Yellen has expressed a strong desire to support the Fed’s commitment of transparency and openness with its policies.
Known for being a consensus builder and a Keynesian economist, Yellen approaches monetary policy from a dovish position and is a strong defender of the accommodative monetary policies that Chairman Ben Bernanke orchestrated since the global financial crisis erupted in 2008.
How far Yellen will be able to advance those accommodative policies in 2014 with the Fed’s quantitative easing program remains an open question as the Fed Reserve has already extended its balance sheet by $ 3.8 trillion and is facing a host of new questions about how to map out a pathway to unwind its bond purchases without causing major disturbances in the market.
The unwinding of the Fed’s quantitative easing program of $ 85 billion in monthly bond purchases is expected to test the resiliency of the economy to continue growing in the midst of a strengthening U.S. dollar, higher interest rates, and weaker cash flows to emerging markets.
In a spirit of openness and transparency, Yellen has already released the text of her address that will be read later today on Capitol Hill.
Yellen commended Chairman Bernanke in her address for helping to stabilize the financial system, preventing a further decline in the economy, and restarting growth.
Yellen highlighted some of the key challenges facing the U.S. economy and admitted that the labor market and economy are “performing far short of their potential” while inflation has been running below the Federal Reserve’s goal of 2 percent.
“For these reasons, the Federal Reserve is using its monetary policy tools to promote a more robust recovery. A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases.”
Concerning the Fed’s supervisory and regulatory role, Yellen wrote that capital and liquidity rules and strong supervision are important tools for addressing the problem of financial institutions that are regarded as “too big to fail.”
“In writing new rules, however, the Fed should continue to limit the regulatory burden for community banks and smaller institutions, taking into account their distinct role and contributions” Yellen added.
If confirmed, Janet Yellen will begin after Chairman Bernanke’s final term ends on Jan. 31st.