Associated PressWASHINGTON - In a history-making selection, President Barack Obama nominated Janet Yellen to be chairman of the Federal Reserve, a critical post as the nation continues its fitful economic recovery.

If confirmed she would be the first woman to lead the powerful central bank.

Yellen, who currently holds the No. 2 spot at the Fed, would replace Ben Bernanke, whose eight-year tenure at the helm of the Fed ends Jan. 31.

Obama introduced Yellen as a "proven leader."

"And she's tough, not just because she's from Brooklyn," he said.

He credited her for being a consensus builder, adding: "She understands the human cost when people can't find a job."

Yellen, 67, emerged as the top candidate after Lawrence Summers, a former Treasury secretary and White House favorite for the job, withdrew from consideration last month in the face of rising opposition.

A close ally of the chairman, Yellen has been a key architect of the Fed's efforts under Bernanke to keep interest rates near record lows to support the economy.

She likely would continue steering Fed policy in the same direction as Bernanke.

Her nomination could face resistance from congressional critics who argue that the Fed's low-rate policies have raised the risk of high inflation and might be breeding dangerous bubbles in assets like stocks or real estate.

Yellen drew outspoken support from Senate Democrats, a third of whom signed a letter this summer urging Obama to choose her.

While economists saw Obama's choice of Yellen as a strong signal of continuity at the Fed, analysts said the difficult job of unwinding all of the Fed's support without causing major financial market upheavals would fall to Yellen.

"Yellen is not going to rock the boat in terms of her approach to monetary policy," said David Jones, chief economist at DMJ Advisors. "But it will be her challenge to reverse this prolonged and unprecedented period of monetary ease."

The central bank reaches into the lives of millions of Americans. Its two main missions are fostering maximum employment and stabilizing prices.

With its power to regulate the supply of money and set interest rates, it influences economic activity, hiring and inflation. It also is the leading regulator of banks and plays a crucial role as the country's lender of last resort when banks can't get their money elsewhere.

In accepting the nomination, Yellen said more still needs to be done to strengthen the recovery. She said the past six years have been tumultuous for the economy and challenging for many Americans. She said that while the recovery is not complete, "we have made progress, the economy is stronger and the financial system is sounder."