Bloomberg reports that Janet Yellen, the president of the San Francisco Fed, will be tapped as Vice Chairman of the Federal Reserve, replacing the retiring Donald Kohn.

The nomination is pending completion of vetting by the Obama administration, one person said. The vice chairman gets a four-year term, subject to Senate approval, and a separate term on the Fed Board of Governors. The people spoke on condition of anonymity because the selection hasn’t yet been announced.

Yellen, 63, would replace Donald Kohn, a 40-year Fed veteran who resigned effective June 23. Yellen, who served as President Bill Clinton’s chief economist in the 1990s, said last month that the U.S. economy “still needs the support of extraordinarily low” interest rates. She would gain a permanent vote on monetary policy, instead of having a vote one year out of every three as a regional Fed chief.

Liberals ranging from Dean Baker to Paul Krugman would be happy with this choice. She’s far less of an inflation hawk than her predecessors, and practically everyone on the Fed currently. “She’ll provide exactly the kind of intellectual flexibility the Fed needs,” said Krugman today.

There remain two other empty spots on the Board of Governors, and the Bloomberg article comes up with some possibilities for them: Sarah Bloom Raskin, the Maryland commissioner of financial regulation, and Peter Diamond, an econ professor at MIT. I’m going to have to plead ignorance on them. Actually just filling the spots, which has a real economic impact, rather than leaving them empty, would have an impact.

But Yellen seems like a good choice.

UPDATE: A contrary view.