Obama will make the announcement at a White House event also attended by outgoing Fed chairman Ben Bernanke, the official said Tuesday.
Yellen, currently a vice chair of the US central bank, emerged as favorite for the post after another possible pick, former Treasury secretary Lawrence Summers, pulled out of the running due to opposition from both Democrats and Republicans in the Senate.
Yellen, 67, sits smack in the middle of the Fed “doves” — those focused on stimulating the economy back to full employment and, not yet at least, worried about the specter of easy money sparking uncontrollable inflation.
She has spent more than a dozen years altogether at the Fed in various positions, including the last four years as vice chair. She would be the central bank’s first female chief, if confirmed by the Senate.
She will begin to prepare for her confirmation hearings at a time of stark partisanship in Washington, with Obama and Republicans facing off over the need to lift the US debt ceiling and a government shutdown.
Summers, who served as a key White House economic advisor in the crisis-marred initial few years of Obama’s first term, had run into trouble over his record on policy while a member of the Clinton administration in the 1990s and for a supposedly abrasive personality.
In particular, three Democratic senators on the Senate Banking Committee, the first stop for congressional approval, raised questions about Summers having driven the banking deregulation that led directly to the financial crisis, and about his alleged closeness to Wall Street.
Yellen, by contrast, won the backing of around 500 economists, who signed a petition stating that she was one of the first members of the Federal Reserve’s Open Market Committee to realize the financial sector’s difficulties in 2007 could cause a major recession.