Federal Reserve System chairman nominee, Janet Yellen, said during a Senate Banking Committee hearing in Washington today that the stimulus program is important for the US economy and should not be removed too soon or rapidly.
She emphasized her commitment to America’s strong economic recovery.
“I consider it imperative that we do what we can to promote a very strong recovery. It’s important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero.”
As vice-chairman of the US Federal Reserve Bank, Janet Yellen helped Ben. S. Bernanke, who leaves as chairman on January 31st, 2013, put together the purchasing of $85 billion per month in bonds until unemployment reached a low-enough level.
Yellen said that the stimulus program definitely has more benefits than harms.
She added that stronger regulations are still needed to protect the financial system, unemployment needs to come down more rapidly and compellingly, and for the moment no asset-price bubbles are visible on the horizon regarding property or equities.
After listening to Yellen, analysts believe that for the short-term at least, the Fed will keep the program going.
Markets responded positively as the S&P’s 500 index reached 1,790 at the close of trading today in New York.
Senior strategist at bond-fund manager Pimco, Tony Crescenzi, said to the Wall St. Journal after the hearing “The prospective Fed chair gets an A for showing her depth of knowledge while at the same time showing an adept skill for communicating well under pressure while conveying the sense of continuity that markets expect during the transition ahead.”
CNNMoney described Janet Yellen’s questioning session before the Senate Banking Committee as “smooth sailing”.
Talking about stock prices, Yellen said they have risen robustly. However, “I think that if you look at traditional valuation measures ….. you would not see stock prices in territory that suggests bubble-like conditions,” she added.
To which Republican Senator Bob Corker asked whether she might have the courage to “prick” the bubbles. Yellen answered “I believe that I would.”
Janet Yellen most likely will be confirmed
Yellen’s first hurdle on her path to become chairman is the Senate Banking Committee, which consists of 10 Republicans and 12 Democrats. They will probably vote next week. Most people agree she will get through.
However, after the hearing Louisiana’s Republican Senator, David Vitter, said that he would oppose Yellen’s nomination.
Then the Senate votes. Yellen will need at least 60 votes. Historically, no chairman has ever received fewer than 70 votes in the Senate.
Who is Janet Yellen? A short biography
Born – Janet Yellen was born on August 13th, 1946, in Brooklyn, New York, to Anna (née Blumenthal), a homemaker and Julius Yellen, a doctor.
High school – she graduated from Fort Hamilton High School, Bay, Ridge, Brooklyn.
1967 – graduated from Brown University (summa cum laude) with a degree in economics.
1971 – received her PhD. in economics from Yale University.
Status – married to Nobel prize-winning economist George Akerlof, professor emeritus at the University of California, Berkeley. Robert Akerlof, their son, works at the University of Warwick, England, as an assistant professor.
1971-1976 – assistant professor at Harvard University.
1977-1978 – an economist with the Federal Reserve Board of Governors.
1980 – to date – carrying out research at the Haas School of Business, University of California, Berkeley, where she is Professor Emeritus and teaches macroeconomics to MBA and undergraduate students. She has received the school’s outstanding teaching award twice, and was named Eugene E. and Cathaerine M. Trefethen Professor of Business and Professor of Economics.
1997-1999 – chair of the Council of Economic Advisers to President Bill Clinton.
1994-1997 – appointed as a member of the Federal Reserve System’s Board of Governors.
Other posts – has taught at the London School of Economics and Harvard University. Was vice-president of the American Economic Association and was a fellow of the Yale Corporation.
2005-2010 – President and CEO of the Federal Reserve Bank of San Francisco. In 2009, she became a voting member of the FOMC (Federal Open Market Committee). She publicly voiced her concerns about the potential hazards of the housing price boom.
April 28th, 2010 – to date – nominated by President Barack Obama to take over vice-chair of the Federal Reserve System from Donal Kohn. The nomination was confirmed by the Senate Baning Committee (17 to 6). Yellen was sworn in for a four-year term in October 2010.
October 9th, 2013 – she was officially nominated to take over from Ben Bernanke as chairman of the Federal Reserve System.