Janet Yellen, President Obama’s nominee to be the next chairwoman of the Federal Reserve, faces the Senate Banking Committee this week in a confirmation hearing that is sure to ignite fireworks over monetary policy and banking regulation.
But if current economic conditions persist, all indications are that facing a handful of prickly senators and earning her expected confirmation will be the easiest part of Yellen’s tenure leading the central bank.
During the last five years, the Federal Reserve has embarked on a series of unprecedented maneuvers to stimulate the economy through the recession, and a painfully languid recovery. In addition to keeping interest rates at zero, it has done three rounds of quantitative easing, an unconventional practice by which the Federal Reserve buys bonds and other assets from financial institutions in order to push more cash into the economy, keep long-term interest rates low, and get people lending, borrowing and spending. The latest round, called QE3, has been in effect since September 2012 and has the Fed pumping out $85 billion a month.