Asian Policy Makers Welcome Yellen

Policy makers in Asia reacted warmly to the news President Barack Obama will nominate Janet Yellen to head the U.S. Federal Reserve. Ms. Yellen has been more supportive of long-term easy monetary policies, which many in Asia welcome. Fears the Fed would quickly exit its extraordinary monetary stimulus, pushed up global interest rates and led to a sharp sell-off in Asian assets this summer.

The Fed’s decision not to cut back on its bond-buying program last month, added to Ms. Yellen’s dovish stance, have helped Asian markets recover some lost ground in recent weeks.

Bank of Japan Deputy Governor Hiroshi Nakaso.

“I have known Ms. Yellen since she was the president of the Federal Reserve Bank of San Francisco, and added to that, she was my counterpart at the Group of Seven and the Group of 20 when I was assistant governor in charge of international affairs, which was my previous job. That is why my view is that we already have a relationship of mutual trust with each other,” Mr. Nakaso told a news conference.

“The biggest issue for the time being will be how the U.S. economy is going and how the U.S. monetary policy will be changed in response to that. The world is watching where U.S. monetary policy is headed, whether and how the so-called ‘tapering’…will be carried out.”

Mr. Nakaso added: “This isn’t only about the Fed but concerns all the central banks. Explaining their assessment of economic and price conditions as well as their views of monetary policy as clearly as possible to let the market understand them–in another world, ‘communication,’ or maybe ‘forward guidance’–is very important. This is probably an issue being closely watched by not only the Bank of Japan but also the international market.”

Bank Indonesia Deputy Governor Perry Warjiyo.

“This will be positive for the global and Indonesian financial market. According to my knowledge Janet is more dovish than other (candidates) so I expect tapering will not happen soon,” Mr Warjiyo said. He added that the news comes at a time of uncertainty for the U.S. economy due to the ongoing partial U.S. government shutdown. “The government shutdown likely also will weaken the U.S. economy,” he said.

Indonesian Trade Minister Gita Wirjawan.

“We are hopeful that her appointment will help…the global economic recovery outlook,” Mr. Wirjawan said. He said Indonesia was pushing ahead to bolster its economy, which has large budget and current account deficits. The “scale and pace of the taper off” in the Fed’s massive bond-buying program will affect Indonesia’s “effort to preserve our economic robustness,” he said.

Philippine Finance Secretary Cesar Purisima

“From the perspective of the Philippines, Ms. Janet Yellen is an excellent and worthy choice as successor to Chairman Ben Bernanke of the Federal Reserve. Her nomination is an historic one, as the first woman to helm the position of undoubtedly the world’s most important central ban,” Mr. Purisima said in a statement.

More importantly, Ms. Yellen’s nomination signals a commitment to stability, continuity, and a smooth transition at the Fed. Ms. Yellen was one of Chairman Bernanke’s co-pilots as they navigated the turbulence of the global financial crisis, as well as the uncertainty of its aftermath. On their watch, the United States was saved many times from economic disaster, and I am confident that her leadership will continue to ably guide the Fed,” he said.

“I am hopeful that Ms. Yellen’s term will be one that embodies not just steady policy continuity, but a consultative leadership that recognizes the position of the United States as the global economy’s reserve currency. As developing economies across the globe continue to emerge, A Federal Reserve that maximizes dialogue will be ultimately beneficial not just for the world, but for the United States as well.”