The U.S. Senate confirmed late Monday afternoon Janet Yellen as the next head of the Federal Reserve, making her the first woman to head the world’s most powerful central bank and arguably the most important woman banker in modern history.
The vice chair of the Fed since 2010, Yellen won confirmation from the Senate Banking Committee on Nov. 21, paving the way for the approval Monday evening from the full senate.
The outcome was expected, and Yellen, 67, will take the helm after Chairman Ben Bernanke’s second four-year term ends on Jan. 31.
Yellen was co-architect of a controversial bond-buying program by the Fed designed to help boost investment and economic activity. But it’s come at a cost of $85 billion a month since December 2012, and it will fall on her to unwind these efforts at a pace that doesn’t disrupt the economy nor spike inflation.
"No one can deny that the risks are real and the results could be devastating," warned Sen. Charles Grassley, R-Iowa, taking to the floor before the vote to express his opposition.
The Fed’s benchmark federal funds rate, which influences the cost of borrowing for consumers and businesses alike, has been held at near zero since December 2008. It will fall to Yellen to eventually begin raising the cost of borrowing after a record low costs for a record period of time.
"I think she is going to be forced to be the Fed chair that tightens policy," said Dean Croushore, an economics professor at the University of Richmond in Virginia and co-author of a textbook with Bernanke. "She’ll have no choice but to do that."