Janet Yellen, the new chair of the US Federal Reserve, has taken over office from Ben Bernanke. Ms Yellen was voted in by the Senate and is the first woman to lead the Fed. The vote to approve her was 56-26, and she succeeded Mr Bernanke after his second four-year term expired.
In her first words since taking over, she said the bank would continue on its plan to cut its monetary easing measures for the economy. The Fed had planned in late 2013 that it would scale back its $85bn monthly bond-buying programme - quantitative easing - after months of speculation and deliberation.
She said while there has been a significant improvement in the US jobs market in recent months, the country’s recovery was far from complete.
Nancy Curtin, chief investment officer at Close Brothers Asset Management, has said Ms Yellen’s problems are similar to those the Bank of England’s governor Mark Carney faced when he took over. Of her first speech, Ms Curtin said, “Her dovish stance in this inaugural speech to congress is to be welcomed.
“While the level of unemployment has hurtled towards the 6.5 per cent target, it doesn’t tell the full story.”
She added, “2014 will be a year of benign liquidity and nothing Yellen has announced makes us doubt this. While QE has been scaled back in the UK and US, this could be offset by monetary policy in Japan and, potentially, Europe.”
Meanwhile, Gautam Batra, managing director and investment strategist at Signia Wealth, said Ms Yellen’s refusal to highlight the recent weakness in economic data is a “clear indication” the Fed has changed its view regarding the efficacy of further asset purchases.
“Fed policy is now subject to the whim of financial markets. Fixed income investors should be concerned and reduce duration in portfolios as interest rates rise from these unnaturally low levels.
“The US dollar should be bolstered by rising US yields,” he added.