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The appointment must be approved by the Senate first, but it should be a formality before Ms Yellen takes the top job at the US central bank.
Traders welcomed the news as Ms Yellen is a supporter of Ben Bernanke’s $85 billion per month bond-buying scheme, and it is widely believed that she will keep the current stimulus package in place. The Dow Jones is up 168 points at 14,971, with dealers increasingly confident that Ms Yellen will pick up the reins at the Fed when Ben Bernanke’s term comes to an end in the new year.
The Bank of England kept interest rates unchanged at 0.5%, while its bond-buying scheme will stay at a total of £375 billion, in line with expectations. If the current 7.7% UK unemployment rate declines further rumours are likely to circulate over when the Bank may start to trim the stimulus package.