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Thursday, October 27, 2016

Washington (AFP) – Janet Yellen will face hostile Republicans doubtful of the Federal Reserve’s easy money policies when she appears before senators Thursday to defend her nomination to lead the U.S. central bank.

Yellen, chosen by President Barack Obama to replace Ben Bernanke as Fed chair, is expected be easily approved by the Senate Banking Committee, given its dominance by Democrats.

But the close Bernanke ally will be pressed to justify the Fed’s continuing stimulus program against worries by conservatives that the $85 billion a month asset-buying operation is piling up future risks and liabilities.

And even if the panel approves her, she could still face a delay in the full Senate where at least two Republicans have pledged blocking actions, aimed at extracting other political concessions.

If Yellen, currently Fed vice chair, is however approved, she will replace Bernanke on February 1.

Respected economist Yellen, 67, was nominated by Obama in October after the president’s apparent first choice, former White House advisor Larry Summers, faced strong objections from Senate Democrats as well as Republicans.

Yellen would be the first woman to head the Fed. Obama described her as “exceptionally qualified” to become “one of the most important policymakers in the world.”

Her nomination comes as Fed policymakers themselves are debating whether the stimulus policy known as quantitative easing is still needed to keep the economy growing.

The Fed was expected to begin tailing it back in September, but it held off, seeing weaknesses in growth and also political risks ahead.

On Tuesday three top Fed officials gave differing views on when the taper should happen.

Richard Fisher, president of the Dallas branch of the Fed, suggested an earlier move would be better, while Atlanta Fed chief Dennis Lockhart was more cautious and a third, Narayana Kocherlakota of the Minneapolis Fed branch, said the central bank could even consider adding to its stimulus.

Yellen, who as an academic and a policymaker has a history of being focused on bringing down unemployment, has not weighed in publicly on the debate.

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Copyright 2013 The National Memo