President Obama is going to nominate Janet Yellen to run the Federal Reserve. Here are a few key things to know about Yellen. For more on what the Fed chairman actually does, see our recent post, The Key To Power At The Federal Reserve? Running The Meetings.
She's likely to keep interest rates very low for a long time.
The key thing the Fed does is adjust interest rates, which affects everything from mortgages to student loans. When people at the Fed are worried about unemployment, they keep interest rates low. When they're worried about inflation, they raise rates. Yellen has repeatedly said that sustained high unemployment is a bigger problem than inflation (which right now is still pretty low), and that the Fed should be reluctant to raise rates until the economy is on sure footing.
In 2007, when others were predicting that the U.S. wouldn't even enter a recession, Yellen was worried.
As the Washington Post pointed out, Yellen was prescient at a December, 2007 Fed meeting:
At the time of our last meeting, I held out hope that the financial turmoil would gradually ebb and the economy might escape without serious damage. Subsequent developments have severely shaken that belief. The bad news since our last meeting has grown steadier and louder, as strains in financial markets have resurfaced and intensified and as the economy has shown clear signs of faltering.
Her relationship with the Fed runs very deep. The Federal Reserve Board is where she started her career and where she met her husband. She led the San Francisco Fed as President for several terms in between stints as a professor at UC Berkeley. She served once as Federal Reserve Board member, in D.C., and currently serves as its Vice Chairman, second in command to Ben Bernanke.
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