The US president will recommend a new head of the Federal Reserve in the next few weeks to replace Ben Bernanke. Bernanke has added his name to those of Volker and Greenspan as someone who has made an indelible impact. Unfortunately, the appointment of his successor will be mired in Washington politics. Janet Yellen, currently deputy to Bernanke, is the favourite in financial markets and, importantly for some, a woman. Former US Treasury Secretary Lawrence Summers is a White House insider, reputedly very smart but highly controversial bringing doubts about his capacity to carry off the role of steady hand on the tiller. A Yellen appointment is seen as a smooth transition. Summers will add market risk as the debate about his views coincides with the Fed beginning to phase down its stimulus.
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