For the Fed's Janet Yellen, It's No More Ms. Nice Chair

Federal Reserve Chair Janet Yellen has been called a dove so many times, including in this magazine, that one half-expects to spy white feathers protruding from her black suits. Her career has taken her through such liberal enclaves as New Haven, Cambridge, Mass., and Berkeley, Calif. She’s married to a rumpled lefty (and Nobel laureate) who once called the George W. Bush administration “the worst government the U.S. has ever had.” She’s devoted much of her research to unemployment, the doves’ No. 1 concern. This March, in her first speech as Fed chair, she broke from the Fed’s tradition of depersonalizing policy by introducing three “brave men and women” who were struggling to find jobs. When President Obama nominated her last year to head the Fed, bond king Bill Gross told Bloomberg TV, “She’s a dove, actually, with a capital D.”

It’s time for a reappraisal. With apologies to the legendary Gross and other labelers, Yellen isn’t a true dove—that is, someone who consistently puts fighting unemployment above keeping a lid on inflation. The perception that she is may be the biggest misunderstanding in all of finance and economics. Investors and corporate executives who bet that rates will remain superlow in coming months and years because the Yellen-led Fed will hang back could be in for a nasty surprise.