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Policy challenges loom as Yellen prepares to lead Fed

Published on Jan 7, 2014 7:41 AM

(REUTERS) - Ms Janet Yellen, who was confirmed by the United States (US) Senate on Monday to succeed Mr Ben Bernanke as chair of the Federal Reserve, will take the helm of the world's most influential central bank as it attempts to finally move on from an era of economic crisis.

When Ms Yellen, an accomplished economist and the Fed's current vice-chair, takes the reins on Feb 1 she will face a series of delicate policy challenges, starting with how quickly to wind down the Fed's aggressive bond-buying campaign.

Here are the main challenges on the horizon:

BLOATED BALANCE SHEET. After three rounds of quantitative easing, or QE, the Fed's balance sheet has swelled to about US$4 trillion (S$5 trillion), a record level and far higher than the approximately US$1 trillion the Fed has carried in more normal times.

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