Janet Yellen’s Legacy

The economy and financial markets are doing well and the outgoing Fed chair has done everything to keep it that way

Federal Reserve Board Chairman Janet Yellen in Washington on March 15. BRENDAN SMIALOWSKI/AFP/Getty Images

Janet Yellen will be replaced by Jerome Powell as head of the Federal Reserve (Fed) when her first and only term ends in February 2018.

Nonetheless, many believe she has done a good job as Fed chair. She inherited a very loose monetary stance from her predecessor, Ben Bernanke, and started to apply the brakes to a very dangerous machine as soon as the U.S. economy began to recover. Right now, financial markets and the economy are in the best shape since the financial crisis. But this does not mean Yellen’s job is over, nor that there aren’t any risks to the recovery.

Goldilocks

In the next few weeks, Yellen will be facing her final challenge at the Fed. Her task is to neutralize the profligacy of the past before inflation breaks out and the stock exchange corrects. She must also minimize the impact of higher interest rates on the beneficiaries of the easy-money bonanza.