Barak Obama has just announced that Ben Bernake is stepping down as head of the FED and will be succeeded by Janet Yellen.
Obama said that Janet Yellen has an “Understanding of the Feds dual mandate of increasing employment , creating jobs and a sound monetary policy”
The President went on to explain that Janet Yellen “Served in leadership in the fed for more than a decade as vice-chair for the past three years and she has proved exemplary as the driving force for policies that have boosted the recovery. Janet is renowned for her good judgment. She sounded the alarm early about the housing bubble, about excesses in the financial sector and about the risks of a major recession. She doesn’t have a crystal ball but what she does have is a keen understanding of how markets and the economy work not just in theory but also in the real world and she calls it how she sees it! Janet knows how to build consensus. Janet understands the necessity of a stable financial system and is committed to increasing employment. America’s workers and families will have a champion in Janet. She will be the first woman to head the fed in the 100 year history.”
Following Obamas speech Janet took the stand and stated her aims “To promote maximum employment stable prices and a strong and stable financial system”
She said “The past six years have been tumultuous for the economy and challenging for many Americans. More needs to be done to strengthen the recovery particularly for those that have been hardest hit by the Great Recession. We have made progress, the economy is stronger and the financial system sounder. Credit goes to Ben Bernanke for his wise courageous leadership”
She continued “We have further to go…. Too many Americans can’t find a job and worry how they will pay their bills. We can ensure that inflation remains in check and doesn’t undermine the benefits of a growing economy”……………
…………… “We can and must safeguard the financial system………………The Fed has powerful tools to influence the economy and the financial system.”
She has a reputation for arguing the withdrawing of QE slowly rather than turning off the financial taps.
Economic Commentator Justin Wolfers said
“She (Yellen) has been described as a central banker’s central banker who thoroughly understands economic policy making.”
“The Federal Reserve statute says very directly of Janet Yellens mandate that her job is to look after the United States. She is not meant to consider implications on the rest of the world other countries”.
At Exeid we think it will be more of the same so for now the Fed will probably continue issuing $85 billion per month to shore up the financial system. Here in the UK we will no doubt continue to follow suit.
To read about the recent appointment of new Bank of England Chief, Mark Carney, click here
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