President Obama today formally made a right and bold decision to appoint Janet Yellen as chair of the Federal Reserve.
The nomination is groundbreaking in that it puts a woman in charge of monetary policy for the first time in the Fed’s history. But, more consequentially, it places at the helm a person who is, in Obama’s words, “committed to both sides of the Fed’s dual mandate” to drive unemployment rates downward as well as keep inflation low.
That is a big deal. Previous Fed chairmen have been notorious about being inflation hawks, putting a heavy foot on the brakes of the economy to keep the growth engine in check, even if that means millions of people on the streets with no jobs and no hope.
A lengthy profile of Yellen in The New York Times says that, in comparison to previous Fed chairs, “she has expressed greater concern about the economic consequences of unemployment, a stronger conviction in the Fed’s ability to stimulate job growth and a greater willingness to tolerate a little more inflation in order to reduce unemployment more quickly.”
At least on that score, Yellen is squarely pointed in the direction we need from a leader of the Fed. With the current paralysis in Congress forcing a default to austerity policies that are slowing the economy and blocking job creation, we need a Federal Reserve that will not hesitate to stand in the gap for beleaguered working-class people.
Obama also noted that Yellen “understands the necessity of a stable financial system where we move ahead with the reforms that we’ve begun: to protect consumers, to ensure that no single institution is too big to fail and to make sure the taxpayers are never left holding the bag because of the mistakes of the reckless few.”
It’s another “dual mandate,” not necessarily written into law but should be woven into the moral code of the Fed: to be as faithful steward of the monetary needs of Main Street and working-class families as the Fed has traditionally been of the concerns of Wall Street.
We’re looking forward to seeing how the Senate probes her commitment to those mandates. We expect that in addition to her ample qualifications, her commitment to using monetary policy to help lower unemployment and rebuild the middle-class economy will be more than enough reason for the Senate to approve Yellen’s nomination with dispatch.