(Reuters) - President Barack Obama will nominate Federal Reserve Vice Chairwoman Janet Yellen to be the next head of the U.S. central bank on Wednesday, putting her on course to be the first woman to lead the institution in its 100-year history.
If confirmed, Yellen would replace Ben Bernanke, whose current term as head of the Fed ends in January. Obama is due to make the announcement at the White House at 3 p.m.
DIANE GARNICK, FOUNDER, CLEAR ALTERNATIVES, NEW YORK, NY:
"With the Federal Reserve facing one of the most important periods in history, Janet Yellen is a great choice. Her experience with the Council of Economic Advisors coupled with her academic prowess make her an optimal choice to guide the US economy through a period of rising rates.
"Many Americans remain concerned over the continuing high unemployment rate. Yellen's focus on the labor market could bring a much needed relief as tapering this year becomes rising rates in the ensuing years."
ERIC STEIN, PORTFOLIO MANAGER, EATON VANCE, BOSTON:
"I think this been expected by the market (since Summers pulled out) though the fact that President Obama took this long to announce her led some to believe that he was thinking about announcing someone else like Don Kohn.
"I think equity markets will rally (and S&P futures are up a little) and the dollar will sell off somewhat based on this announcement as she is certainly very dovish.
"However you may not see huge reactions in markets as her nomination was already basically priced into markets and you have so much noise coming out of Washington that will markets in different directions completely independently of the news of her impending nomination."
DAN FUSS, VICE CHAIRMAN AND SENIOR PORTFOLIO MANAGER OF LOOMIS SAYLES, BOSTON:
"Thank God Yellen will be nominated under the current circumstances. You don't want a change at the central bank right now. And when it comes to qualifications, Janet Yellen is an outstanding person for the post. My guess is this is a good thing for the Treasury market. The markets were acting very sick today. People were going on the sidelines, so this Yellen news is one uncertainty lifted from already nervous markets."
U.S. SENATOR BOB CORKER, REPUBLICAN, TENNESSEE:
"I voted against Vice Chairman Yellen's original nomination to the Fed in 2010 because of her dovish views on monetary policy. We will closely examine her record since that time, but I am not aware of anything that demonstrates her views have changed."
SCOTT SPERLING, CO-PRESIDENT OF THOMAS H. LEE PARTNERS, NEW YORK, NY:
"I think she is an exceptionally capable individual, whose vast experience at the Fed will be helpful at this point in time. Our economic recovery has been disappointing, it is a good thing that we have been on the positive side but it remains weak and fragile.
"Given the turmoil in Washington, which is the result of some combination of ineptitude and intolerance, it will be good to have somebody at the Fed who is mindful that one of their key missions is to sustain growth."
TIM DUY, PROFESSOR, DEPT. OF ECONOMICS, UNIVERSITY OF OREGON, EUGENE, OR:
"Coming to the job with a wealth of experience in economic policy, she is by far the best candidate in the field, and her focus on communications comes at a time when the Federal Reserve very much needs someone to put the "guidance" back into "forward guidance."
BONNIE BAHA, HEAD OF GLOBAL DEVELOPED CREDIT AT DOUBLELINE CAPITAL LP, LOS ANGELES:
"I think it's fair to say that the anxiety level in the markets has elevated materially over the last several trading sessions. The announcement of the Yellen nomination is far from random and should have a calming effect on global capital markets. The escalating rhetoric between Obama and Congress has the potential to spiral out of control quickly given the looming debt ceiling deadline. With at least one major uncertainty removed the hope must be that this announcement buys some time for all parties involved with respect to the ongoing budget debate."
ROBERTO PERLI, CORNERSTONE MACRO, WASHINGTON, DC:
"I think markets will receive the news well (aside from the fiscal debacle). It resolves an important uncertainty as to the direction of the Fed, and points overall to a market-friendly Fed, in the sense that premature removal of policy accommodation becomes now less likely. In terms of communication style I see Yellen as more likely to be upfront about her own views than Bernanke is, to be less of a consensus seeker at all costs, to defer less to the FOMC consensus, and to produce clearer communication as a result."
MICHAEL S. HANSON, SENIOR ECONOMIST, BOFA MERRILL LYNCH GLOBAL RESEARCH, NEW YORK, NY:
"Not surprised. With all the fiscal issues currently before the Senate, confirmation may not be complete until later November or early December. Means continuity in Fed policy going forward. Market will discover over time that she isn't the perma-dove that some have suggested, but easy policy will remain in place for some time - as the Bernanke Fed has already indicated."
JOHN BRYNJOLFSSON, CIO OF ARMORED WOLF, ORANGE COUNTY, CALIF.:
"With betting odds stacked 85 percent in her favor, hardly a surprise. Her reputation is one of emphasizing the dual mandate, and within the dual mandate, fostering full employment, so is more dovish than Bernanke.
"While hawks fear that this dovishness risks inflating bubbles, paradoxically Yellen's reputation for more than cordial collaboration may mean the Fed fully airs hawks' concerns before voting on policy, and suggests (Bernanke's) grand plan of making the Fed a more process-based institution than a personality-based institution, may be the result."
ANNETTE BEACHER, HEAD OF ASIA-PACIFIC RESEARCH, TD SECURITIES, SINGAPORE:
"The markets are loving it is what I can say. The U.S. dollar has weakened appropriately. Our base case is that if Yellen is now in the race - although this needs to be approved by the Senate - it delays the potential for tapering.
"If Yellen is confirmed, it's more likely that tapering won't be until March at the earliest. From a financial markets perspective everyone is comfortable with the Yellen nomination. She's certainly well-known, she's certainly well-known to be dovish so this is extremely good for risk assets, it should be good for equities, it should be good for emerging markets. It's a risk-positive piece of news for the otherwise ongoing U.S. government deadlock."
CRAIG JAMES, CHIEF ECONOMIST, COMMONWEALTH SECURITIES, SYDNEY:
"The view is that Janet Yellen would basically follow similar policies as Ben Bernanke, which means that she's going to taper or wind back stimulus only slowly over time. That suggests that the U.S. dollar is going to remain relatively low. We've seen reaction in financial markets today where both the euro and Aussie dollar have spiked somewhat higher.
"It's still a case that it's more speculative rather than anything else, but if the confirmation does go through as widely perceived then it's going to be a case of business as usual for the Federal Reserve. It's just a case of handing the baton from the chairman to the vice chairman, so that's comforting for the global economy, comforting for financial markets, that you've got continuity at one of the most important organisations in the world."
BRAD DELONG, PROFESSOR, UNIVERSITY OF CALIFORNIA, BERKELEY:
"I do not think any chair nominee ever has been better prepared to take the job than Janet Yellen is right now. And I think it is good that she is so prepared. If Obama does nominate her in the Senate does confirm her, she will face challenges of the same order of magnitude that Paul Volker and Marriner Eccles faced. It is news that does make me sleep easier."
TOHRU SASAKI, HEAD OF JAPAN RATES & FX RESEARCH, JPMORGAN, TOKYO:
"The nomination of Yellen is not as surprising because (Lawrence) Summers already retreated from the race. The market has been thinking the most possible candidate is Yellen, so it shouldn't be a big surprise.
"In addition to that, the market focus has been on the budget side ... It's not going to have a significant impact on the market."
PETER CARDILLO, CHIEF MARKET ECONOMIST AT ROCKWELL GLOBAL CAPITAL, NEW YORK:
"I don't think it's going to be a surprise to the market. Obviously it certainly coincides with the release of the Fed minutes at a time when uncertainty in the markets is climbing. It's not earth-shattering news, but certainly it suggests that the Fed is going to continue with a dovish policy."
"I'm calling for them to perhaps begin scaling back slightly in December but a lot of that depends on the outcome of the Washington shutdown and above all the debt ceiling. But based on pure economics and a slight decline in GDP due to the government shutdown, I think that puts them on hold until December. If the impact of the Washington shutdown weighs more heavily on the economy, that could push it back until the first quarter of 2014. In terms of raising rates, we'll still have a dovish attitude from the Fed."
U.S. SENATOR TIM JOHNSON, DEMOCRAT, SOUTH DAKOTA:
"I commend President Obama on his selection of Dr. Yellen to be the first woman to serve as Federal Reserve Chairman. She has a depth of experience that is second to none, and I have no doubt she will be an excellent Federal Reserve Chairman. In addition to having more than a decade's worth of experience working on monetary policy at the Federal Reserve, Dr. Yellen has also worked at the White House as Chairman of the Council of Economic Advisors and taught at some of world's most prestigious universities. I will work with Ranking Member (Mike) Crapo and the rest of the members of the Banking Committee to move her nomination forward in a timely manner."
MATT MCCORMICK, PORTFOLIO MANAGER AT BAHL & GAYNOR INVESTMENT COUNSEL, WITH $9.6 BLN OF ASSETS UNDER MGMT, CINCINNATI, OHIO:
"The market will be mildly pleased, but most of this is already baked into the cake. She uses the same playbook as Bernanke, and the market should not expect any change to the status quo. She's viewed as a dove, and with the turmoil in the market lifting longer-term yields recently and the Fed's admission that an uptick in rates has hit the economy, she'll stay dovish. Markets may move up a little bit on this news, but then that will be overwhelmed by the debt ceiling negotiations."
U.S. SENATOR JEFF MERKLEY, DEMOCRAT, OREGON:
"We need a Federal Reserve Chair who is both qualified and experienced, and who would look at policy-making through the lens of what's best for the middle class. Janet Yellen is exactly that. She's been one of the strongest voices on the Federal Reserve Board for job creation and the middle class and has been consistently correct in her economic predictions. Her experience as Vice Chair, and previously as President of the San Francisco Federal Reserve, makes her an incredibly qualified nominee.
"Thank you Mr. President, for this historic nomination. Janet Yellen, the first woman ever nominated for the position, is a great choice."
U.S. SENATOR CHARLES E. SCHUMER, DEMOCRAT, NEW YORK:
"She's an excellent choice and I believe she'll be confirmed by a wide margin."
SEAN CALLOW, SENIOR CURRENCY STRATEGIST AT WESTPAC IN SYDNEY:
"Markets are giving Yellen the thumbs up, counting on QE being maintained at full pace until further notice.
"It's a notable reaction given Yellen's nomination was so widely expected and that it comes at a time markets are already assuming the FOMC will not seriously consider a policy change at the October meeting given the fiscal standoff."
STOCKS: U.S. stock index futures rose on the news
(Americas Economics and Markets Desk; +1-646 223-6300)