President-elect Joe Biden announced plans to nominate former Federal Reserve Chair Janet Yellen as Treasury Secretary. If approved, Yellen, 74, will become the first woman to head the Treasury Department. Same, she was the first lady to lead the FED: her chairmanship was marked by the strong dollar and rising interest rate. Here are the key facts to know more about the potential treasury boss:
*Steady rate hikes during Janet Yellen’s chairmanship. Chart: Investing.com
- Yellen’s Background and Accomplishments
- Yellen, a Brooklyn, New York native, earned her Ph.D. in economics from Yale University in 1971, focusing on a career in labor markets.
- She is currently serving as an economist at the Brookings Institution.
- She was the first woman to serve as Fed chair between 2014 and 2018 and was the head of President Bill Clinton’s Council of Economic Advisers in the late 1990s
- Even as she led over the first interest rate hikes after the 2008-2009 financial crises, the technology sector increased, and tech stocks doubled.
- Yellen was the first person to ever serve in the top posts at the White House Council of Economic Advisers, the Federal Reserve, and Treasury.
- She has a reputation as a dove on monetary policy matters due to her focus on reducing unemployment.
- Yellen engineered the Fed’s lift-off from near-zero interest rates in December 2015, an increase that some progressives have criticized as too hasty.
- Yellen’s pre-government background came mainly as an academic economist and monetary policy expert: unusual resume from other top Treasury bosses who typically have corporate backgrounds and high profile global experience.
*How Dollar value raised with Yellen. Chart: Tradingview
- Why Biden Picks Yellen?
- Biden seeks to bridge differences within the Democratic Party as he seeks to bring someone who will be acceptable from the progressive to the moderate coalitions.
- Yellen is expected to push for more stimulus, a key focus of president-elect Biden in his presidency in addressing the pandemic and economic fallout.
- In Yellen, Biden will attract support from Wall Street, which feared that more provocative picks such as Senator Elizabeth Warren and progressives would be too friendly to big banks and the wealthy.
- In October, Yellen joined former Bank of England Governor Mark Carney to urge governments to tackle climate change, a principal policy focus of president-elect Biden.
- How did Markets React?
- Investors welcomed Yellen’s selection and “was seen as a win for markets, since the former Fed chair should focus on fixing the economy rather than the progressive Democratic agenda”-Patti Domm, CNBC.
- Some investors are concerned about recent comments she made on taking stronger regulatory action after the financial market tumbles due to lockdown restriction in March to curb coronavirus spread.
- S&P 500 benchmark stock index rose more than 1% following the news
- What Will Yellen Face?
- Yellen’s most immediate challenge would be breaking a logjam on Capitol Hill to deliver economic relief to long and growing unemployment lines.
- She is demanded to steer the U.S. economy devastated by the resurgent pandemic.
- Yellen is supposed to lead to close collaboration with Fed chief Jerome Powell and other monetary policymakers.
- She is likely to reverse Treasury Secretary Steven Mnuchin’s decisions to let emergency lending programs expire at the end of the year, which caused a feud with the Fed.
- Yellen may face possible Republican protests for restarting the emergency lending programs without congressional action.
Dollar Index fell during 2020. DXY is -4.07% YTD.
