It is predicated that her nomination will be confirmed by a large margin. Senator Chuck Schumer, a Democratic member of the Senate finance committee, called her "an excellent choice".
The nomination ends a long public debate about Mr Obama’s choice for the new chair. Mrs Yellen has been front runner for the appointment; however she faced stiff competition from former Treasury secretary Lawrence Summers, who has received support from Mr Obama’s administration.
The appointment comes as Fed pump £52bn a month into the US economy in an economic stimulus programme known as quantitative easing (QE).
The 67-year-old Brooklyn native is considered an employment market expert and has been a staunch ally of Mr Bernanke as he has attempted to use low interest rates and the QE programme to revive the US jobs market.
