Will the Fed Stay Accommodative Under Yellen?

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Oct. 8 (Bloomberg) -- President Barack Obama is preparing to nominate Federal Reserve Vice Chairman Janet Yellen to head the U.S. central bank, according to two people familiar with the decision. Bank of Tokyo-Mitsubishi's Chris Rupkey and Bloomberg's Michael McKee comment on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

Preparing to nominate fed vice chairman janet yellen to have the central bank according to two people familiar with the decision.

The 67-year-old yellen will succeed fed chairman ben bernanke whose term ends january 31. the people asked not to be identified because the decision had not made public yet.

The president will hold an event in the east room of the white house at 3:00 p.m. washington time wednesday to make the announcement.

He will be joined by dr.

Yellen and chairman bernanke for that announcement.

Fed vice chairman yellen became the leading candidate to replace mr.


She had been picking up support from democratic senators and party leaders including former president bill clinton following the decision by former treasury secretary joey -- less -- larry summers to withdraw from consideration.

White house officials made influential halls to senators to encourage them to voice support for yellen to head off any attacks on her before the president announced a decision.

The fed nomination is subject to u.s. senate confirmation.

Michael mckee joins us on the phone from new york.

Michael, talked to me about janet yellen's journey from the early 70's as an assistant professor at harvard until now.

She was actually born in brooklyn and went to yell.

She has taught at yale and the university of california.

In between, she has worked at the white house as chairwoman of the council of economic advisers.

She worked for bill clinton in his second term.

She ended up at the fed -- the san francisco fed as president in june of 2004. she served until 2010 when she became the vice chair of the federal reserve.

This is a historic nomination because it breaks ground in several ways.

She is the first woman i will be nominated to become the chairman of the fed.

She is also the first fed vice chair ever to succeed to the top job.

People see her as extraordinarily well qualified she has been in the federal reserve system for the last 19 years.

She began her career as a researcher at the fed.

She has the credentials and the groundbreaking personal characteristics.

Michael, will there be any change from a bernanke-led fed to a yellen-led fed.

The change will be at the margins.

There will be some change in style.

She is a much more deliberate person.

She tends to speak from notes rather than off-the-cuff.

She is not vivacious on camera but of course ben bernanke wasn't when he first began as fed chairman.

She basically follows the same sort of policy line.

Perhaps a little more willing to use the data to determine which way she is going then ben bernanke.

A little less willing to take a chance.

We will say.

It will change in office.

Don't expect too much of a policy change because she has been on the fed since 2010. really, since 2004. she has voted for everything they have done.

Michael mckee, standby if you would.

Let's get some reaction from chris.

He joined me on the phone now.

I guess after the withdrawal from larry summers of his name for nomination, this is not much of a surprise, is it?

I guess it really isn't a surprise.

I am very happy with the announcement.

I shouldn't -- i think she will do a very good job just by way of fair disclosure, her husband was my professor at berkeley.

I am a big fan of yellen.

It is interesting that she was the chief of communications, the communications policy at the fed.

Fed vice chair under bernanke.

She will be an appropriate person to try and forward the fed's strategy from the balance sheet.

She helped put it on their.

She will be there to see its dismantling in the years to come.

Chris, she has articulated for maintaining a higher accommodative policy.

Is that something we might see continue if she takes over as chairman of the fed?

I don't know.

I don't know if that was her view or -- the fed vice chair traditionally backs the chairman 100%. that may have been the fed chairman's view as well.

To keep interest rates lower for longer to risk overshooting on inflation to try to get the unemployment rate down.

It will be my guess that she will want to keep rates down a little bit lower than the consensus on the federal open market committee right now.

She might not want to lift interest rates until 2016 where the committee wants to raise rates around august or september of 2015. let's bring back in michael mckee.

How do you think the market will be reacting to this tomorrow?

They will see it as good news because she is as chris says, a little bit more dovish in outlook and maybe inclined to keep rates lower for longer.

That has been a boost to the equity markets.

It has been talked about for so long, it is hard to see it being a huge or long-lasting bounce on yellen's nomination.

The markets are already pretty much priced in.

Any chance that ms.

Yellen may suffer from being too close to mr.

Bernanke in thinking and philosophy?

Would that cause a problem in the senate for her?

Probably not.

She will have some votes against her.

That is the nature of the political climate on capitol hill these days.

People who don't like the fed or people who don't think the fed should continue the easy money policies that it has adopted.

Janet yellen both being a woman, supremely qualified, gets her a lot of points on capitol hill.

She has been on the fed now for 19 years.

She doesn't have any financial conflicts.

There shouldn't be anything in her background that hasn't been already investigated.

She should have a relatively easy time.

Certainly better then ben bernanke who had 30 votes against tampa last time he was confirmed.

Chris repke, if ms.

Yellen is confirmed, if she does become the next chairman of the u.s. federal reserve, what is her first order of business?

What about the dual mandate?

A lot of people on capitol hill have been criticizing the fed and telling them, pick one or the other but not both.

I think she will be very measured.

She will give -- she will watch both the employment side of the mandate and inflation as well.

I don't think you want to make a mistake that she is today -- too dovish.

They would never allow inflation to become a problem.

It is right there in their statement right now that if inflation gets to 2.5%, there is going -- they are not going to weigh the employment side of the mandate quite as much.

She is definitely very concerned if inflation were to go up.

At the moment, they are saying inflation is too low, not too high.

It doesn't come into play right just yet.

I think she will do a very good job at corralling the committee.

There are a lot of different voices.

She may be a better consensus driver then perhaps the fed chairman is.

We are receiving word from new york's senior senator chuck schumer that janet yellen would be an excellent choice for fed chairman.

He is predicting that she will have an easy confirmation process.

Michael mckee, talk to me about janet yellen.

Talk to me about her style.

She tends to work behind the scenes.

She is not one for making a lot of public announcements.

One of the more silent members of the fed.

But extraordinarily influential in her thinking.

She has one of the more advanced academic backgrounds of people on the federal reserve.

That has been aligned with an bernanke which has been good for him.

She is also quite influential in international central banking circles.

She spent a lot of time working with the bank for international settlements.

Chris smith and earlier that she is someone who has been deeply involved in the fed strategy for communications.

That is one area where they have had trouble.

It will be interesting to see where she goes with that.

Whether she makes any major changes from ben bernanke and the way they talk to the public now.

Chris rupkey, let me get you let the last word in here.

Any problems from his yellen during the confirmation process?

I don't think so.

It is coming at an awkward time.

The government is shut down.

I can tell you this, she needs to be confirmed by the senate and not the house.

If she had to be concerned -- confirmed by the house, forget it.

Chris rupkey and michael mckee joining us on the phone

This text has been automatically generated. It may not be 100% accurate.


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