Yellen Will Leave Federal Reserve Next Year
Ms. Yellen’s departure would leave the Fed with just three people on its seven-member board, which would be the fewest in the Fed’s history and could strain the board’s ability to manage the operations of the central bank. The dearth of governors also means that a majority of the votes on the Fed’s Open Market Committee, which sets monetary policy, are now held by the presidents of regional reserve banks, not political appointees. The committee consists of 12 voting members — the seven Fed governors, the president of the Federal Reserve Bank of New York and four additional Reserve Bank presidents.
The Trump administration filled one vacancy on the Fed’s board earlier this year when Mr. Trump nominated Randal K. Quarles as the vice chairman of supervision. But it has not yet nominated any candidates to fill the three current vacancies and now, with Ms. Yellen’s departure, Mr. Trump will have a fourth seat to fill.
Ms. Yellen, 71, has spent almost two decades at the Fed. President Bill Clinton named her as a governor in the mid-1990s. She returned to teach at the University of California, Berkeley, before going back to the Fed as president of the Federal Reserve Bank of San Francisco in 2004. She became vice chairwoman in 2010.
As vice chairwoman, she worked closely with the then-chairman Ben S. Bernanke on the Fed’s post-crisis stimulus campaign. She paid tribute to Mr. Bernanke in her resignation letter, writing that his “leadership during the financial crisis and its aftermath was critical to restoring the soundness of our financial system and the prosperity of our economy.”
After succeeding Mr. Bernanke in 2014, Ms. Yellen continued those efforts.
Among her most important achievements was convincing Fed officials to be patient and to repeatedly extend the stimulus campaign. She rallied her colleagues to the view that the economy had plenty of room to expand without driving up inflation. The Fed continued to hold down interest rates, and job growth continued at a pace many had regarded as unsustainable.
The unemployment rate fell to 4.1 percent in October while inflation has remained sluggish. The Fed has rarely come closer to its goals of maximizing employment and stabilizing inflation.
Andrew Levin, a Dartmouth economist who worked as an adviser to Ms. Yellen, credited her with “leading and managing a relatively large Fed committee with lots of independent voices.”