Federal Reserve Chair Janet Yellen

The Most Powerful Woman in the World

Fed Chair Janet Yellen
Fed Chair Janet Yellen briefs the press after a two day meeting in the Federal Open Market Committee.. Photo by Orjan F. Ellingvag/Corbis via Getty Images

On October 9, 2013, President Obama nominated Janet L. Yellen to become the Chair of the Federal Reserve Board of Governors. She replaced Ben Bernanke on February 1, 2014. Her four-year term is up in 2018. The President and Congress must approve her reappointment for her to serve another term.

She sailed through her nomination review by the Senate Banking panel on November 14, 2013. She easily won Senate confirmation, even though tea party Senators like Rand Paul (R-KY) said they'd delay it.

Paul wanted the Senate to vote on his bill to increase congressional scrutiny of the Fed. He admitted that she'd win the post. (Source: "Shelby Quizzes Yellen on Fed Issues," The Wall Street Journal, October 31, 2013)

Why Is She Important to the U.S. Economy?

Like all Federal Reserve Chairs, Yellen is responsible for guiding the central bank's monetary policy. This is even more critical now that the national debt limits fiscal policy.

As the spokesperson for the Fed, Yellen is now the country's premier economic expert. Her words can sway the stock market, interest rates, and the value of the dollar. That makes her the most powerful person in the United States and, therefore, the global economy.

What Is the Role of the Federal Reserve Chair?

The Fed Chair is expected to lead the Fed's Board and the FOMC committee that sets and executes monetary policy. Chairs are appointed for four-year terms but normally wind up serving eight or more.

Therefore, they are allowed to take a long-term view independent of voters and short-term political pressure. That's good, because the Fed's tools act slowly, sometimes taking months to filter down into the general economy. Consistent direction and management of expectations are just as important as the steps taken themselves.

Lack of this, known as stop-go monetary policy, caused the uncertainty that created stagflation in the 1970s.

Why Yellen Makes a Good Fed Chair

Of all the Fed Board members, Yellen was most accurate in forecasting that expansive monetary policy would not create inflation. That ability to understand how the economy works, and to distinguish real threats like unemployment from imagined ones, like inflation, is critical as a Fed Chair. She must be able to manage expectations by staying clear in her path. (Source: "The Case for Janet Yellen," Reason.com, August 1, 2013)

In addition, Yellen is a long-standing advocate of financial regulation. This is important as the Fed implements the Dodd-Frank Wall Street Reform Act. Overall, she is most likely to continue Bernanke’s policies. That ensures a smooth transition. She has been to every one of the former Chairman's policy meetings. He always consulted closely with her when making decisions. (Source: "Yellen's To Do List Shortens,"  The Wall Street Journal, December 19, 2013.)

Dr. Yellen was Vice Chair of the Board of Governors of the Federal Reserve System since October 4, 2010. This four-year term coincided with a 14-year term as a Board member.

She was the President and chief executive officer of the Federal Reserve Bank of San Francisco from 2004-2010.

Dr. Yellen is Professor Emeritus at the University of California at Berkeley. There, she's the Eugene E. and Catherine M. Trefethen Professor of Business and Professor of Economics and has been a faculty member since 1980. She'written on a wide variety of macroeconomic issues, and is an expert in the causes, mechanisms, and implications of unemployment.

President Bill Clinton appointed Dr. Yellen the Chair of the Council of Economic Advisers from 1997-1999. She was the Chair of the Economic Policy Committee of the Organization for Economic Cooperation and Development at the same time. (Source: "Janet Yellen," The Federal Reserve.)

Yellen's Early Career

Dr. Yellen graduated summa cum laude from Brown University with a degree in economics in 1967.

She received her Ph.D. in Economics from Yale University in 1971. She received the Wilbur Cross Medal from Yale in 1997, an honorary doctor of laws degree from Brown in 1998, and an honorary doctor of humane letters from Bard College in 2000.

Dr. Yellen was an Assistant Professor at Harvard University from 1971-1976, a staff economist for the Federal Reserve Board from 1977-1978/. She was a faculty member at the London School of Economics and Political Science from 1978-1980.

Dr. Yellen was a faculty member at Berkeley from 1980-1994. She then joined the Federal Reserve Board from 1994 to 1997. She has served as President of the Western Economic Association, Vice President of the American Economic Association and a Fellow of the Yale Corporation. She is a member of both the Council on Foreign Relations and the American Academy of Arts and Sciences.