Senate Republican leader McConnell to oppose Yellen

Reuters News
Posted: Dec 17, 2013 1:55 PM
Senate Republican leader McConnell to oppose Yellen

By Richard Cowan

WASHINGTON (Reuters) - U.S. Senate Republican leader Mitch McConnell said on Tuesday he will oppose President Barack Obama's appointment of Janet Yellen as the next head of the Federal Reserve, citing concerns about her willingness to defend the dollar.

Yellen, who nonetheless is expected to win Senate confirmation this week, has stirred McConnell's concerns "about her commitment to the most important job of the central bank - maintaining the purchasing power of the dollar. After years of federal stimulus, we need a Fed chairman who is unquestionably committed to a strong dollar," McConnell said in a statement.

McConnell also noted that he supports legislation being proposed by fellow Kentucky Senator Rand Paul that would establish audits of Fed monetary policy and deliberations. McConnell is running for re-election and faces a 2014 challenge from a Tea Party-backed candidate, as well as a Democratic opponent.

The Fed, under Chairman Ben Bernanke, has been buying $85 billion in bonds a month since September 2013 in a third round of so-called quantitative easing aimed at pushing down long-term borrowing rates and boosting investment and hiring.

Policymakers on Tuesday began a two-day meeting at which they will debate the future of that policy, although most economists expect them to stand pat until next year.

Critics of the bond-buying program worry the Fed's easy money policies can drive investment to countries with higher interest rates, weakening the dollar. Fed officials typically argue that the bond-buying program is aimed at boosting the U.S. economy, and Bernanke has said his policies are consistent with a strong dollar.

Yellen, who as Fed Vice Chair has been supportive of the policies, is slated to take the reins when Bernanke's term ends on January 31.

McConnell supported Obama's reappointment of Bernanke in 2010.

Obama's Democrats control 55 of the Senate's 100 seats. A recent Senate rule change means that the 67-year-old former economics professor needs to only win backing from a simple majority to be confirmed.

(Reporting by Richard Cowan; Editing by Chizu Nomiyama and Leslie Gevirtz)