The smart money's on a female for the Fed

The leading contender to take charge of America's purse-strings as head of the Federal Reserve would be the first woman in the job

Few jobs in the realm of economic policy are as consequential as that of the chairman of the US Federal Reserve. Every utterance by the incumbent is parsed by traders, economists, journalists – anyone, really, with an interest in the fortunes of the world's largest economy.

Ben Bernanke, who has held the position since early 2006, is due to finish his second term at the beginning of next year. The prevailing consensus among Fed watchers is that he will then hand over responsibility for US monetary policy to someone else, stepping back after eight years during which he's had to strain every lever at his disposal as the financial system imploded and the country, and the world, entered a deep, bruising recession. And with the recovery far from complete, and markets growing increasingly nervous about how and when the extraordinary measures will be rolled back, the identity of his successor has already become a hot topic on this side of the Atlantic.

Leading the pack, according to recent gossip on Wall Street and a new poll of economists published this week, is Janet Yellen, Mr Bernanke's number two, the vice-chair of the Fed and the ex-head of the San Francisco Fed, who is known for the importance she attaches to the health of the labour market.

Others in the running include Larry Summers, a former Treasury Secretary and Obama adviser; Roger Ferguson, a former Fed vice-chair who now runs the TIAA-CREF, the giant financial services concern that handles around $500m in assets for university professors and workers in the non-profit sector; and Donald Kohn, another former Fed vice-chair and a veteran of the US monetary system whom Alan Greenspan has cited as his "first mentor" at the central bank.

Some have even floated the name of Tim Geithner, President Barack Obama's former Treasury chief who, when the banking system buckled in 2008, was installed at the New York Fed.

Whoever gets the job will face an extraordinarily challenging in-tray. The tea leaves – in the form of Mr Bernanke's recent testimony before Congress and the minutes of the last meeting of the Fed's policy-setting Open Market Committee – suggest that a partial reversal in policy might be in store later this year. But even if that happens – and if it does, it will almost certainly only involve a reduction in the $85bn (£54bn) worth of government and mortgage bonds that the Fed is currently buying every month, not any action on the Fed's benchmark interest rate – it'll fall to Mr Bernanke's successor to manage the unwinding of the loose policy regime that's been in place ever since the onset of the financial crisis.

If the Fed rolls back the measures too fast, it might strangle the nascent recovery. If it's too slow, it could stoke inflation as the economy gathers speed.

In Ms Yellen's case, the critics say that she might prove too dovish, at a time when the emphasis at the Fed is shifting to how and when to tightening policy (some critics worry about the possibility that she might overcompensate for her reputation by rolling back the stimulus measures too fast). Her focus on unemployment, however, sits well with the prevailing political imperatives of the day.

Above all, she is seen as an able policymaker who already exerts considerable influence at the central bank.

At 66, she wouldn't be the youngest candidate – but then, Alan Greenspan was only a couple of years away from his 80th birthday when he began his final term at the helm of the bank.

The political calculus certainly appears to be in her favour. No one would be able to question her credentials – besides heading the San Francisco branch of the Fed, she is a former chair of the Council of Economic Advisers, has taught at Harvard and the University of California at Berkeley, and in the late Seventies was a member of the London School of Economics faculty – while the Obama administration would be able to claim credit for naming the first woman to lead a major central bank.

This week, a Reuters poll of 44 economists showed just how far ahead she is in the pack of runners and riders for the job: 40 of those surveyed said they expected her to be named for the job. Support for appointment wasn't as strong. But with 23 of 38 economists endorsing her for the role, it remains convincing.

Mr Summers, though far behind Ms Yellen in the polls, is seen as the other high-profile alternative. He, too, boasts strong credentials, although he will no doubt face questions about his very central role in loosening the regulatory regime that governs the financial sector when he was in government in the 1990s. There was also the controversy at Harvard when he was president of the university and seemed to suggest that men outdo women in certain subjects owing to biological differences, something for which he has long since apologised.

Of the others, Mr Geithner, many think, is unlikely to want the job, given his comments on the matter earlier this year.

The President could, of course, opt for a candidate with a lower public profile, in which case Mr Ferguson, with his experience at the Fed and in the financial services sector, could emerge as a potential dark horse nominee.

The answer should be forthcoming by the autumn, when the White House is expected to formally name its choice.

Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
Arts and Entertainment
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Is this how Mario Balotelli will cruise into Liverpool?
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
Poet’s corner: Philip Larkin at the venetian window of his home in 1958
booksOr caring, playful man who lived for others? A new book has the answer
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
Matthew McConaughey and his son Levi at the game between the Boston Red Sox and the Houston Astros at Fenway Park on August 17, 2014 in Boston, Massachusetts.
advertisingOscar-winner’s Lincoln deal is latest in a lucrative ad production line
Life and Style
Pick of the bunch: Sudi Pigott puts together roasted tomatoes with peppers, aubergines and Labneh cheese for a tomato-inspired vegetarian main dish
food + drink
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Junior Quant Analyst - C++, Boost, Data Mining

£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Service Desk Analyst- (Desktop Support, Help desk)

£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Junior Quant Analyst (Machine Learning, SQL, Brokerage)

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

UNIX Application Support Analyst- Support, UNIX, London

£45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

Day In a Page

Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

Waxing lyrical

Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
From slow-roasted to sugar-cured: how to make the most of the British tomato season

Make the most of British tomatoes

The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

Mackay, Moody and another grim day for English football

The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
La Liga analysis: Will Barcelona's hopes go out of the window?

Will Barcelona's hopes go out of the window?

Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape