WASHINGTON — President Barack Obama on Wednesday announced one of his most important economic decisions, nominating Janet L. Yellen to lead the Federal Reserve system and be his independent co-steward of the US economy. He called her “one of the nation’s foremost economists and policymakers.”
Yellen, 67, who would be elevated from her current position as the Fed’s vice chairwoman if the Senate confirms her nomination for a four-year term, joined Obama in the State Dining Room of the White House. With them was the retiring chairman, Ben S. Bernanke, whom the president hailed for helping to guide the economy through the worst recession and financial crisis since the Depression.
In thanking Obama and Bernanke, Yellen said that “more needs to be done to strengthen the economy.”
Yellen said the past six years have been tumultuous for the economy and challenging for many Americans, and that while the recovery is not complete, ‘‘We have made progress, the economy is stronger and the financial system is sounder.’’
She said considerable credit for the recovery goes to Bernanke, adding that it was a privilege to serve with him and learn from him.
Yellen would be the first woman to lead the Fed. Her nomination comes amid one of the most rancorous and fraught battles in years between the political parties over the course of the economy. The federal government is in partial shutdown because of an impasse over funding in the fiscal year that began Oct. 1, and the Treasury Department is approaching the debt limit next week, jeopardizing its authority to borrow to pay the nation’s bills and forcing emergency actions that could be financially destabilizing at best and provoke a global crisis at worst.
The nomination adds a wild card to the mix, and the need for Senate hearings, debate and votes adds to Congress’ already complicated mix of year-end business. A few Senate Republicans, like Sen. Bob Corker of Tennessee, have spoken out against her as too dovish on monetary policy, but Yellen is widely expected to be confirmed.
Administration officials say the timing of her pick is mostly a coincidence, but it could serve Obama’s interests in the current budget fight.
Yellen has nearly unanimous support in the Democratic majority in the Senate, which must confirm her for the job. By contrast, had Obama nominated Lawrence Summers, who was a divisive figure among Democrats, that would have injected a wedge at a time the president needs a united party at his back. Perhaps worse, it would have ensured a Senate confirmation fight when Obama least needs it and when markets crave greater certainty in the direction of monetary and fiscal policy.
Financial markets and businesses have been anxious to know who would take over from Bernanke when his term ends Jan. 31, and wind down the expansionary monetary policy that he engineered to help the recovering economy — particularly given the three-year-old stalemate between the Democratic White House and the Republican-controlled House of Representatives over the more stimulative fiscal policies that Obama favors. Generally markets see Yellen as representing welcome continuity after Bernanke, having been his ally on the major issues.
Material from The Associate Press was used in this report.