UPDATE 1-U.S. Senate sets Monday vote on Janet Yellen to head Fed

Thu Jan 2, 2014 4:34pm EST

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By Richard Cowan

WASHINGTON Jan 2 (Reuters) - Janet Yellen came a step closer to final approval as the Federal Reserve's next chair after the U.S. Senate set a Monday vote on President Barack Obama's choice to succeed Ben Bernanke.

The Senate is expected to vote at around 5:30 p.m. EST (2230 GMT) Monday on Yellen, according to a Senate Democratic leadership aide.

Yellen, who would become the first woman to chair the U.S. central bank, would take the reins on Feb. 1, one day after Bernanke ends a two-term stint during which he reached deep into the Fed's monetary toolbox to try to revive an economy hit by a massive financial crisis that sent it into the worst downturn in decades.

Yellen has been deeply involved in the decisions to press the Fed into uncharted monetary policy waters, as the Fed's vice chair since 2010 and before that as chief of the San Francisco Fed.

As she steps into her new role, her biggest challenge will likely be to begin to pare back the Fed's crisis-era stimulus. The bank took a first step in that direction last month when policymakers voted to pare its massive bond-buying stimulus program to $75 billion a month from $85 billion.

The Senate on Dec. 20 voted 59-34 to move forward with Yellen's nomination, indicating she had enough support to win confirmation.

Bernanke's second four-year term expires on Jan. 31.

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