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With Summers Out, Will Obama Turn To Yellen For Fed Post?

Financial markets rallied Monday, a day after Lawrence Summers took himself out of the running to be the next chairman of the Federal Reserve. Summers had been seen as a front-runner to replace Ben Bernanke, whose term expires in January.

His exit improved the odds for his chief rival for the position — Fed Vice Chairman Janet Yellen — as well as those of Donald Kohn, the former vice chairman of the Fed board.

The Wall Street Journal reports that stocks soared Monday because investors viewed Summers' withdrawal as a sign that the Fed will continue to keep interest rates low in a bid to stimulate the economy. Fed policymakers are scheduled to meet this week to decide whether to begin "tapering" their bond-buying policy known as quantitative easing.

The Journal said:

"Driving the rally are expectations that whoever succeeds Fed Chairman Ben Bernanke will continue the present course of monetary policy in the U.S. for the next few years and that any scaling back of the Fed's aggressive steps to stimulate the economy will be slow and gradual."

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