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Obama Says Yellen Committed to Fed’s Dual Mandate

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U.S. President Barack Obama & Fed Vice Chairman Janet Yellen
Janet Yellen, vice chairman of the U.S. Federal Reserve and U.S. President Barack Obama's nominee as chairman of the Federal Reserve, right, speaks during a nomination announcement with Obama in the State Dining Room of the White House in Washington, D.C. on Oct. 9, 2013. Photographer: Andrew Harrer/Bloomberg

Oct. 9 (Bloomberg) -- President Barack Obama said Janet Yellen, his nominee to become the first woman to head the Federal Reserve, will bring to the job a deep knowledge of markets and the economy as well as an understanding of the impact of policies on people.

Yellen, 67, is committed to both sides of the Fed’s dual mandate to bolster job growth while keeping inflation in check, Obama said at the White House.

“America’s workers and their families will have a champion in Janet Yellen,” he said.

The president was flanked by Yellen and the current Fed chairman, Ben S. Bernanke, whose term expires on Jan. 31, and who Obama lauded for helping guide the economy during the worst recession since the Great Depression.

Yellen, now the Fed’s vice chairman, said that more needs to be done to strengthen the recovery and that the Fed can promote employment growth while holding down inflation.

“The mandate of the Federal Reserve is to serve all of the American people,” Yellen said.

The nomination is subject to Senate confirmation and is being made as Obama and congressional Republicans seek an end to a stalemate over funding the government and raising the federal debt limit, which the Treasury Department said will be reached next week.

Confirmation Chances

Key Democrats in the Senate, where the party holds a majority, predicted Yellen would easily win confirmation.

Optimism that Yellen won’t rush to withdraw stimulus helped push U.S. stocks higher after two days of declines. The Standard & Poor’s 500 Index gained almost 0.1 percent to 1,656.4 at 4:32 p.m. in New York after plunging 2.1 percent over the previous two sessions, its worst drop since June. Rates on Treasury bills due on Oct. 17 climbed 20 basis points to 0.475 percent, after jumping 14 basis points yesterday.

Bernanke, the Fed’s chairman since 2006, has committed to staying through the end of his term even if Yellen is confirmed before then, according to a person familiar with his plans, who asked not to be identified in discussing private talks.

The president called Bernanke “the epitome of calm” during the 2008 financial crisis.

Lauding Bernanke

“When faced with potential global economic meltdown, he has displayed tremendous courage and creativity,” Obama said. “I’m personally very grateful to you for being such a strong partner in helping America recover from recession.”

The president’s decision to nominate Yellen followed a polarizing and unprecedented public contest for a nomination that Obama described in August as one of the most important decisions of his presidency. Yellen was the favorite in surveys of economists and had the backing of 20 members of the Senate Democratic caucus, who signed a July 26 letter to Obama.

Yellen became the leading candidate after former Treasury secretary and White House economic adviser Lawrence Summers withdrew from consideration last month amid opposition from Senate Democrats.

Bernanke’s predecessor, Alan Greenspan, the Fed chairman from 1987 to 2006, released a statement calling Yellen “an outstanding economist and policy maker. I wish her well as she tackles the tough challenges ahead.”

Former Treasury Secretary Timothy Geithner said Yellen “has a terrific intellect and deep experience on monetary policy issues.”

Yellen’s Experience

A member of the Fed’s Board of Governors and chairman of the White House Council of Economic Advisers during the Clinton administration, Yellen later was president of the Federal Reserve Bank of San Francisco before Obama nominated her to the No. 2 job at the Fed in 2010.

Her nomination as Fed vice chairman passed the Senate Banking Committee with a vote of 17-6, providing a preview of what her confirmation process may look like. There are 12 Democrats and 10 Republicans on the Banking Committee.

As a top deputy to Bernanke, Yellen supported the central bank’s unprecedented bond-buying programs and was a driving force behind a new strategy adopted in 2012 to commit the central bank to goals on inflation and unemployment.

Senate Banking Committee Chairman Tim Johnson, a South Dakota Democrat, pledged to work “to move her nomination forward in a timely manner,” saying her depth of experience is unmatched.

New York Senator Charles Schumer, the chamber’s No. 3 Democrat, said he expected Yellen to be confirmed “by a wide margin.”

To contact the reporter on this story: Margaret Talev in Washington at mtalev@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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