Congress has spent much of the last three years stumbling about like a traveler who’s lost his map, with no coherent strategy for bolstering the weak economy or putting more jobless Americans back to work. Meanwhile, the Federal Reserve has worked indefatigably, creatively and bravely to keep borrowing costs low, which has helped the housing industry regain its footing and encouraged U.S. businesses to expand. President Obama sought to keep the Fed on track Wednesday, nominating the reserve board’s No. 2, Janet L. Yellen, to be its new chair. It was a historic choice — Yellen would be the first woman to lead the Fed in its 100-year history. She also would provide much-needed continuity at the Fed, retaining its sense of mission and activist bent even as it starts withdrawing the fuel it has been pumping into the economy.
Yellen, a former University of California, Berkeley economics professor and San Francisco Federal Reserve Bank president, has a particular expertise in unemployment and labor markets. That’s helpful for a Fed chair, given that the central bank’s monetary policy is required by law to serve two ends: keeping prices stable and promoting full employment. She also brings credibility to the job of combating inflation, having been a strong advocate of the Fed’s move to explicit targets for inflation. Those targets help manage the public expectations that can drive price and wage growth.