WASHINGTON – The Senate confirmed Janet Yellen on Monday as the first woman to lead the Federal Reserve, elevating an advocate of fighting unemployment and a backer of the central bank’s efforts to spur the economy with low interest rates and massive bond purchases.
Yellen, 67, will replace Ben Bernanke, who is stepping down after serving as chairman for eight years dominated by the Great Recession and the Fed’s efforts to combat it.
Senators confirmed her by 56-26, with numerous absences caused by airline flight delays forced by arctic temperatures around much of the country. All 45 voting Democrats were joined by 11 Republicans in supporting Yellen, while 26 Republicans voted “no.”
The vice chair of the Fed since 2010, Yellen begins her four-year term as leader of the century-old bank on Feb. 1. With the economy rebounding from the depths of the recession but only modestly so far, many economists expect her to focus on how to nurture growth without putting it into overdrive, which could risk fueling inflation.
“The big debate will be when the Fed should tighten and how much, rather than when to step on the gas pedal and how hard,” predicted Bill Cheney, chief economist for John Hancock Financial Services, who envisions a growing economy this year.
Under Bernanke, the Fed has driven short-term interest rates down to near zero and flushed money into the economy with huge bond purchases, which it has just started to ease. Yellen, a strong Bernanke ally, has supported those policies and is expected to continue them until concrete signs emerge of sustained improvement of the economy and job market.
In a written statement, President Barack Obama said Yellen’s approval means “the American people will have a fierce champion” who will protect them.
“I am confident that Janet will stand up for American workers, protect consumers, foster the stability of our financial system and help keep our economy growing for years to come,” Obama said.
Lobbyists for the banking and financial services sectors issued statements pledging to work with Yellen. Both industries have led a fight to water down restrictions imposed by Obama’s 2010 law overhauling how the nation’s financial system is regulated.
A native of Brooklyn, N.Y., Yellen previously headed the Federal Reserve Bank of San Francisco, chaired President Bill Clinton’s Council of Economic Advisers and has been an economics professor at the University of California at Berkeley.
Yellen, who as an academic has focused on unemployment and its causes, is considered a “dove” who wants the Fed more focused on creating jobs because unemployment is high and inflation is low. “Hawks” on these issues prefer a stronger emphasis on preventing inflation.
She will preside over her first Fed meetings as chair on March 18 and 19.