Janet Yellen & The Federal Reserve

Janet Yellen is sworn in on Capitol Hill

Janet Yellen has officially been sworn in as the new chair of the Federal Reserve, replacing Ben Bernanke. Yellen is the first woman to hold the position, and faces several obstacles in her initial year as chair. Yellen’s primary objective will be to wind down the Federal Reserve’s bond-buying stimulus program without harming the nation. Although the American economy has been improving recently, it is still very fragile. Yellen is therefore in an incredibly challenging place to enact economic policy that is stable yet effective. The phased reduction of the Federal Reserve’s $85 billion a month Quantitative Easing program has already created issues in emerging financial markets. Quantitative Easing has kept US interest rates low and has therefore resulted in large outflows of cash from the United States into other currencies, as people search for more substantial returns abroad. It will be highly interesting to follow how Yellen’s appointment will shift US economic policy, and how this resulting policy will affect not only our domestic economy, but the global economy. Every action has a reaction, and Yellen’s position is undoubtedly a powerful one.

Yellen is an established economist, and is professor emeritus at the University of California at Berkeley specializing in business and economics. Her credentials suggest that she may be able to respond to the challenges at hand, regardless of the incredible complexity of the situation. However, Bernanke’s Quantitative Easing program marked a period of unprecedented government stimulus, and may provide Yellen substantial, unforeseen obstacles that could threaten the success of her office.
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Chris Geary