Janet Yellen as Fed chief: Questions she will likely face for Fed confirmation
(Reuters) – U.S. lawmakers unhappy with the Federal Reserve will have a prime opportunity to vent their concerns when the Senate Banking Committee vets Janet Yellen as next chair of the Fed, which has become a lightning rod for criticism of policy activism.
Nominated by President Barack Obama on Wednesday, Yellen immediately reinforced views that she is a monetary “dove” by noting the central bank’s duty to serve the needs of all Americans in remarks at a White House ceremony.
Obama picked Yellen to replace Fed Chairman Ben Bernanke, whose term expires on January 31. But she must first be vetted by the banking panel, where Democrats occupy 12 of the 20 seats.
While the math is in her favor – Democrats control the U.S. Senate and need to pick up only six Republican votes to clear any procedural roadblocks and secure her nomination – that doesn’t mean she will not have to endure some tough questions.
Here is a sample of what to expect:
ARE YOU, OR HAVE YOU EVER BEEN, A KEYNESIAN?
Senate Republicans, deeply skeptical of an unprecedented five years of ultra-easy monetary policy, will be eager to ask about an end to the Fed’s bond buying, which has roughly quadrupled its balance sheet to around $3.7 trillion.
They will also want to know how soon she thinks the Fed might raise interest rates, held near zero since late 2008, and how high inflation can go before it does harm.
“I would like to hear Vice Chairman Yellen’s plan for exiting the Fed from the multi-trillion trade it has put on, and I hope she will outline in detail what she sees as the limits of what monetary policy and zero interest rates can achieve in our economy,” said Senator Bob Corker, Republican from Tennessee.
Alabama Senator Richard Shelby, another Republican who sits with Corker on the banking panel, said during her 2010 confirmation hearing for the vice chair’s role that Yellen was known to be a Keynesian, code for someone who backs official intervention to spur growth and hiring. Shelby will likely want to drive home his disapproval of that way of thinking this time around.