Our Views: New face at the Fed

Most of the attention on Janet Yellen has been about her status as the first woman to be the world’s most powerful central banker, but that single sentence does not capture the continuity she brings to the role of chair of the Federal Reserve.

And by the way, that’s “chair” and not “chairwoman,” by her choice.

Yellen succeeds Ben Bernanke, who performed — we think very well — his historic role in the 2008 financial crash and its aftermath. While Yellen is thought to be a bit more liberal than the Republican economist, she shares more than a few of his concerns about long-term unemployment and the need for the Fed to keep both its legal mandates in view, restraining inflation and achieving full employment.

The former is fine, for the moment. The latter is a long way off, but Yellen’s tenure is likely to be more continuity with Bernanke’s than a time of radical departures.

For one thing, her role is constrained by the nature of the Fed board itself. Neither Bernanke, nor Yellen, is a dictator. The board that sets monetary policy includes a set of representatives from the regional banks that make up the Fed. This structure was part of the original political compromises agreed to by President Woodrow Wilson to establish the Fed a century ago.

Yellen is by all accounts a collaborative leader, but she has to be. That’s the way the Fed is set up. And so it is very likely to be the Fed we’ve come to know lately, rather than any great innovator in monetary policy.