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Obama suggests next Fed chief should focus on jobs

Barack ObamaJanet YellenInflation and DeflationBen BernankeFitnessCentral Bank

WASHINGTON -- President Obama praised both Lawrence H. Summers and Janet L. Yellen as "highly qualified" to be the next Federal Reserve chief, but said he had a "range of outstanding candidates" and reiterated that he would not make a decision until the fall.

In a news conference Friday, Obama also suggested that his recent defense of Summers, a former Treasury secretary and one-time chief economic adviser to Obama, should not be construed as Summers somehow having an inside track on the job. Yellen is the Fed's current vice chair.

The president repeated that his main criterion for picking the next Fed leader was someone who understands the central bank's dual mandate -- to control inflation and maximize employment. And right now, he said, that means someone who can boost employment.

"If you look at the biggest challenges we have, the challenge is not inflation," Obama said during a news conference dominated by questions on national surveillance activities. "The challenge is, we've still got too many people out of work, too many long-term unemployed, too much slack in the economy."

Asked about Summers, Obama said he had stood up for him because Summers had come under "a bunch of attacks" even before he was nominated, in a way that the president said was a "sort of a standard Washington exercise."

"I tend to defend folks who I think have done a good job and don't deserve attacks," Obama said, noting that he had felt the same way about Susan Rice, who came under withering criticisms from some lawmakers when she was mentioned as a possible replacement for Hillary Clinton as secretary of State. The furor prompted Rice to withdraw her name from consideration.

The question of whom Obama might nominate to succeed current Fed Chairman Ben S. Bernanke has drawn strong emotions and sharp lines in Washington and elsewhere, as many have come to see the race as between Summers and Yellen.  

Obama has had a close relationship with Summers, including during his time in the White House, but many have voiced opposition to Summers in part because of his widely perceived brusque style. The president is under pressure from many Democrats to choose Yellen, who would be the first woman ever to lead the Fed.

The Fed under Bernanke has taken unprecedented action to support the weak economy, at times sparking intense debate between those who fear that the central bank's easy-money policies will ignite inflation and asset bubbles, and those who see more aggressive monetary stimulus as needed in the face of a slow-growing economy with high unemployment and constrained federal budgets.

Obama on Friday made clear where he sees the emphasis today. "A big part of my job right now is to make sure the economy's growing quickly and robustly and is sustained and durable, so that people who work hard in this country are able to find a job," he said.

The president also agreed that his choice for the next Fed chief is “one of the most important economic decisions" that he would make in his second term, calling it as significant as Supreme Court nominations.

Bernanke's second four-year term as chairman ends Jan. 31. He has not indicated that he wants to be reappointed.

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