MacroScope

Yellen likely to replace Bernanke at Fed, but beware “overwhelming” top picks

June 12, 2013

Reuters has just published a poll of economists that shows Federal Reserve Vice-Chair Janet Yellen is the overwhelming favorite pick for President Obama to replace Ben Bernanke as Fed Chairman next year.

The poll conclusions are based on the collective thoughts of dozens of professionals who are not only paid to make these kinds of predictions, but who are also likely to have been in a conversation with people who ought to know.

But it is worth noting one spectacularly wrong call from recent history.

In a similar Reuters poll, this time just days before UK finance minister George Osborne reported that he had chosen Mark Carney, Governor of the Bank of Canada, as new Bank of England Governor, the overwhelming conclusion among forecasters was that outgoing governor Mervyn King’s deputy, Paul Tucker, would get the job.

To be fair, that was partly because Carney had very publicly said months earlier that he wouldn’t take the job.

And it wasn’t only the consensus that got it wrong – some of Britain’s most established economics journalists were reporting with great conviction that Tucker would be the next Bank of England governor.

That doesn’t mean the consensus isn’t worth paying attention to. But it does mean that the most likely candidate doesn’t always get the job. And that, come to think of it, sounds a lot like conventional wisdom.

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