Likely Fed Picks Back Low RatesJanet Yellen's expected nomination as Federal Reserve vice chairman would bring a strong advocate of low interest rates into the central bank's leadership just as the Fed weighs how to unwind its extraordinary intervention in the economy.For two other vacancies on the Fed's board, the White House says it is considering Sarah Raskin, Maryland's commissioner of financial regulation, and Massachusetts Institute of Technology economist Peter Diamond, an expert on Social Security, pensions and taxation. The three nominees are being vetted and plans could change before an announcement.WSJ reporter Sudeep Reddy provides a look at Janet Yellen's nomination as Federal Reserve vice chair and her likely impact on the central bank's leadership. President Barack Obama's unusual opportunity to name three new members to the Fed's seven-member Board of Governors at once would put an important stamp on the central bank as he tries to boost the economy and labor market. The governors vote on interest rates and oversee a wide range of regulatory policies at the Fed.

Fed Chairman Ben Bernanke, seeking to pick the appropriate time to tighten policy, is likely to get a set of new governors who support keeping interest rates low to help the economy recover.

The likely nominees are expected to be a key counterweight to the Fed's most "hawkish" policy makers—those who generally place inflation risks as a higher concern over unemployment, compared with "dovish" members who generally prefer lower interest rates for a longer period when joblessness is high.

"I expect that the board will eventually appear to be a much more dovish place than it was some time ago," said Allan Meltzer, a Fed historian at Carnegie Mellon University.

The expected nominees either declined to comment or couldn't be reached.

Ms. Yellen, already a strong voice at the Fed through her role as San Francisco Fed president, has been one of the central bank's key defenders of low interest rates, a position that could draw sharp questioning from some Senate Republicans during her confirmation process.

"Some people worry that sustained federal budget deficits and the huge increase in the Federal Reserve's lending and stimulus programs could eventually lead to high inflation," Ms. Yellen said in a recent speech. "Others take the opposite view, arguing that economic slack and downward pressure on wages and prices are pushing inflation down. I would put myself squarely in the second camp."

Ms. Yellen, 63 years old, also could face tough questioning from lawmakers about the high number of bank failures in California, where the San Francisco Fed is a top regulator.

Ms. Yellen was tapped from the University of California, Berkeley faculty in 1994 to become a Fed governor. After almost three years, she moved to the White House as chair of the Council of Economic Advisers under President Bill Clinton.

As president of the regional Fed bank since 2004, Ms. Yellen has earned respect from the Fed's hawks as a skilled economist and worthy adversary. She is known inside the Fed as a nonconfrontational consensus builder and could help to smooth tensions among competing factions at the central bank.

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Bloomberg News

Janet Yellen, president of the San Francisco Fed and likely nominee for vice chairman, speaks at the University of San Diego's Joan Kroc Institute for Peace and Justice last month.

Although Ms. Yellen has a reputation for being a dove, that hasn't always been her position. As a Fed governor in September 1996, Ms. Yellen and Laurence Meyer, another governor at the time, visited the Fed's then-chairman, Alan Greenspan, before a policy meeting to convince him that inflation risks were rising, according to Mr. Meyer.

Mr. Greenspan believed the U.S. was experiencing a productivity boom that would keep inflation low and favored keeping interest rates low. Ms. Yellen and Mr. Meyer wanted to raise them. She and Mr. Meyer failed to sway Mr. Greenspan to start moving toward higher rates, though Ms. Yellen continued her argument days later when Fed officials gathered formally. Inflation remained in check, as Mr. Greenspan expected.

Mr. Meyer, now vice chairman of Macroeconomic Advisers LLC, a consulting firm, calls that case "an example of Janet taking a hawkish position."

The common thread in her positions then and in her positions recently is a strong focus on the interplay between unemployment and inflation. When there is a lot of slack in the economy—represented by unemployment among other measures—Ms. Yellen has tended to believe that inflation risks are low.

That view has placed her in the camp of officials now, with the jobless rate at 9.7%, who see little inflation risk. But not all officials ascribe to that view. Some, pointing to the high inflation and high unemployment of the 1970s, don't see such a strong link between unemployment and inflation.

But high unemployment hasn't been her only concern lately. Ms. Yellen also has been wary of the risk that the Fed's extraordinary efforts to pump money into the financial system to stave off an even worse recession could lead to unintended consequences, such as some new asset bubble.

"She's pragmatic," says Alfred Broaddus, former president of the Federal Reserve Bank of Richmond, who often disagreed with Ms. Yellen when they served at the Fed in the late 1990s, he being more concerned about inflation.

Hawks at the Fed tend to be clustered at its regional banks—in places like Kansas City, Richmond and Dallas. Though Ms. Yellen often disagrees with them, they have tended to work well together. As a vice chairman, one of her roles would be to help the Federal Reserve Board in Washington keep smooth relationships with heads of regional banks.

Ms. Yellen would take a significant pay cut to join the Fed's board. In 2008, she earned $392,600 as president of the San Francisco Fed. The congressionally mandated pay of the Fed vice chair: $179,700. Ms. Yellen's husband is Nobel-winning economist George Akerlof.

With the three nominations, Mr. Obama will have named five officials to the Fed's board. Last January, he placed Daniel Tarullo, a lawyer focused on tough regulation, on the board. In August, he offered Mr. Bernanke a second term as Fed chairman that began last month