Whispers around the White House say President Obama is poised to pick Janet Yellen to be the Federal Reserve vice chairman, Reuters has reported. After Donald Kohn’s departure, is it the Fed doves’ time to shine once again?
After all, Yellen, currently chair of the San Francisco Fed, has been outspoken on her belief that the government needs to keep interest rates at exceptionally low rates — and she leans towards growth policies that favour employment over policies to keep inflation down.
If nominated, Yellen will have to contend with the Fed’s hawks, who are fighting to speed up the process of rolling back the government’s stimulus plans. She would have a permanent vote on monetary policy, instead of one vote every three years. As the FT reported a few days ago:
Hawkish Fed officials have been pushing for a more rapid unwinding of the balance sheet expansion that occurred during the crisis.
This dove isn’t exactly coming to those hawks with an olive branch, however. From Reuters:
“Even with my moderate growth forecast, the economy will be operating well below its potential for several years,” Yellen said on Feb. 22. “If it were possible to take interest rates into negative territory I would be voting for that.”
Reuters also said the White House has picked two other nominees for the Fed’s Board of Governors and that all three are likely to be confirmed together. No confirmation on their names – or avian proclivities – as of yet.