The Challenge Facing Janet Yellen

Jordi Gual analyzes what is in store for the Fed's new chair

07/01/2014 Barcelona

Janet Yellen

Yesterday the U.S. Senate confirmed Janet Yellen as the new chair of the United States Federal Reserve, succeeding Ben Bernanke beginning February 1.

Yellen, who has held the position of vice chairman of the Fed for the last three years, will be the first female at the helm of this institution. Topping her priorities once she assumes her new post is unemployment, a major concern still affecting millions of American families six years after the start of the crisis.

In his recent IESE Insight column, "The Challenge Facing Janet Yellen," IESE Professor Jordi Gual analyzes the major challenges ahead for the new chair of the Fed.

"Yellen assumes the reins just as the Fed begins to grapple with what will be one of its most defining challenges: to move away from the heterodox economic policy it has followed since 2008, and to do so in such a way that it won’t throw the Unites States’ recovery off course," explains Gual. "This is no mean feat," he continues. "One of the reasons this undertaking is so immense is that the Federal Reserve's policies over the last four years have no precedent. During this period, the Fed's balance sheet has exploded from representing 6% to 22% of the U.S. GDP."

Read more in the IESE Insight magazine.

(Photo: Britt Leckman/Official Federal Reserve Photo)