Ben Bernanke hasn’t announced his own retirement, but the race to succeed him as Federal Reserve chairman has suddenly become very public – complete with dueling opinion articles, White House leaks, and senators angling to say who they’d like in the job.
The latest straw in the wind: Economists in a new survey say they’d like to see the post filled by Janet Yellen, the woman who currently serves as Fed vice chair.
She’s viewed as having a similar policy stance to Mr. Bernanke, and perhaps even more willing to place a high priority on economic growth rather than worry about inflation.
The speculation comes after news reports that President Obama’s short list for nomination also features Larry Summers, a long-time economic official in the Democratic administrations of both Mr. Obama and Bill Clinton.
Obama has hinted strongly that he won’t be nominating Bernanke – who will have served eight years guiding interest rates and monetary policy when his term expires early in 2014.
In an interview published over the weekend, Obama said he’s looking at "some extraordinary candidates" and will announce his pick "over the next several months."
Two new surveys of economists suggest considerable backing for Ms. Yellen.
A CNBC survey of a few dozen economists, investment traders, and market strategists showed both a preference for Yellen and an expectation that Obama will choose her.
In the July poll, 70 percent of respondents said they expect Obama to tap Yellen for the job, and 25 percent expect the nod to go to Mr. Summers. When asked who the president should nominate, views were even starker: 50 percent said Yellen and only 2.5 percent favored Summers.
Bernanke himself and conservative economist John Taylor of Stanford University outscored Summers in the survey.
Summers has a reputation as intellectually brilliant, but with an abrasive personality that may not be well suited to the consensus-building task of leading the Fed’s policy committee.
He has differentiated himself from Yellen and Bernanke, in recent comments, by raising questions about whether the Fed’s current “quantitative easing” has been effective. (This “QE” policy involves buying assets such as Treasury bonds in a bid to keep long-term interest rates low and rev up economic growth.)
Another new survey of economists, by USA Today, found 32 expecting Yellen to be Obama’s pick and four expecting Summers, who was Obama’s first-term economic-policy guru and President Clinton's Treasury secretary.
In a weekend interview in The New York Times, Obama said he wants a Fed leader who will work “in service of the lives of ordinary Americans getting better," and not just focus on tame inflation and stable markets.
“Let's make sure that we're growing the economy,” Obama said.
Yellen and Summers aren’t the only ones around with credentials to be considered for the Fed post, but for now the debate is centering on them.
Whoever he picks, Obama must get his nominee through the Senate confirmation process.
Last week, some Democratic senators wrote a letter to Obama in praise of Yellen. By contrast, some Republicans could object to her as not concerned enough about the risk of inflation to the economy.
In an opinion piece published Monday in The Wall Street Journal, former Fed official Alan Blinder of Princeton University praised Yellen’s monetary touch. He said she helped engineer a “perfect soft landing” for the economy in 1996 – so that the Fed’s inflation-fighting boosts in interest rates didn’t go too far and cause a recession.
“If that sounds easy, it’s not,” Mr. Blinder said.