Clinton injects a dose of liberalism into Fed board

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The Independent Online
WASHINGTON - President Clinton yesterday announced two nominations to the powerful seven-man board of the Federal Reserve - his first such appointments and ones that some analysts believe will dilute the inflation-fighting resolve of the US central bank, writes Rupert Cornwell.

The most important choice is that of Alan Blinder, a member of the President's Council of Economic Advisers, to replace David Mullins as vice-chairman of the Fed. This makes him a front runner to succeed Alan Greenspan as chairman as early as August next year, should Mr Clinton not re-appoint Mr Greenspan.

The second newcomer is Janet Yellen, an economist at the University of California. Like Mr Blinder, a former economics professor at Princeton, she is regarded as a liberal if anything, at least as concerned with boosting growth and lowering unemployment as with fighting inflation.

Yesterday was a big chance for Mr Clinton to leave his imprint on the Fed. The other five board members are all Republican appointees. Apart from the chairman, re-appointed every four years, their terms run for 14 years.

The nominations came four days after the Fed raised short-term interest rates for the third time this year, despite White House insistence that inflation is under control.

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