The changing of the guard at the Federal Reserve sees Ben Bernanke bow out as Chairman of the Board of Governors after a difficult tenure during which the world’s biggest economy was buffeted by a series of crises.
He had to mastermind the US central bank’s response to the tumultuous events, including the subprime mortgage horror and housing price bubble which triggered a financial crisis and the collapse – or near collapse – of major financial institutions.
That led to what has been called the gravest economic crisis since the 1930s with a recession effecting millions of Americans.
The Fed’s response was an unprecedented programme of massive bond purchases – known officially as quantitative easing – to pump stimulus money into the US economy.
Those large-scale asset purchases mean the Fed’s balance sheet has risen from 800 billion dollars before the financial crisis struck, to 4.0 trillion dollars last year, and it is heading for 4.5 trillion.
Shrinking that and winding down the stimulus, while boosting growth are the tasks facing Janet Yellen, a highly respected Yale-trained economist .. and the first woman to chair the Federal Reserve in its 100-year history.
BNP Paribas Senior Economist Alexandra Estiot says she also has to head off deflation.
“Actually, the challenge for Janet Yellen is to make inflation rise. Because right now it is too low and it’s not moving. She also has to ensure that the unemployment rate continues to fall, but fall for the right reasons, and not because unemployed people get discouraged and give up looking for work, so they’re not recorded in the statistics,” Estiot told euronews.
Like Bernanke, Yellen is very much focused on jobs. She has said economic policy should be “about caring for real people” and creating jobs.
The US unemployment rate did drop to 6.7 percent of the workforce in December.
That is the lowest since October 2008, but it is down partly because of those discouraged workers giving up hope of finding a job.