President-elect Joe Biden plans to nominate former Federal Reserve Chair Janet Yellen to head the Treasury Department, a source close to the transition told NPR on Monday, marking the first time a woman would head the powerful agency.

Yellen would play a leading role in shaping economic policy as the United States continues to dig its way out of the deep hole caused by the coronavirus pandemic.

Yellen led the central bank from 2014 to 2018. She also was a top White House economist in the Clinton administration.

She won some backing from Republicans when she was confirmed as Fed chair. She is also popular with progressive Democrats.

"Janet Yellen has absolutely shown a willingness to challenge corporate power and not be intimidated by big banks," said Adam Green, co-founder of the Progressive Change Campaign Committee. "That is a key ingredient as you rebuild our economy."

While the economy has bounced partly back from the pandemic recession, the recovery appears to be losing steam just as the virus is setting new records for daily infections.

The surge in COVID-19 cases has already triggered new restrictions on business activity and is likely to discourage consumers from going out and spending money as retailers are preparing for the important holiday shopping season.

At the same time, federal aid that helped jump-start the recovery during the spring and early summer is drying up. Emergency unemployment programs that currently support some 13 million people are set to expire at the end of December.

Lael Brainard, a Federal Reserve governor who was seen as in the running for the Treasury job, has warned the premature withdrawal of federal aid is one of the biggest risks facing the U.S. economy.

"We will have a much better, stronger, more inclusive recovery if we do in fact continue to see that targeted fiscal support that was so important to the bounce back early in the recovery," Brainard said.

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