The White House has indicated it intends to nominate San Francisco Federal Reserve Bank President Janet Yellen as Vice-Chairman of the Federal Reserve Board in Washington.

The White House has said the top candidates for the two remaining Board slots are the relatively unknown attorney Sarah Raskin, Maryland’s Commissioner on Financial Regulation, and Peter Diamond, a well-known Social Security specialist from MIT.

Yellen’s appointment is logical. A highly regarded macroeconomist who previously served as a member on the central bank’s board she is expected to perform the traditional roles of the Fed Vice-Chair representing the Board at numerous international fora and more importantly watching the President’s back as the Fed balances a desire to see the unemployment fall on the one hand and inflation remain contained on the other.

Likewise, given the Fed’s renewed focus on financial regulation, the Raskin appointment makes some sense. The truly odd choice of the three is Peter Diamond. As with the other two, his political leanings certainly agree with the President’s but he appears to have expressed little or no previous interest in matters of monetary policy or much of anything else under the Fed’s jurisdiction. His published papers deal with tax policy, pension policy, and especially Social Security; important topics all, but hardly the Fed’s focus.

Perhaps least surprising and most disconcerting, the three appointments together suggest a new bloc of votes on the policy setting Federal Open Market Committee for dovish monetary policies, i.e. those less concerned with containing inflation than reducing unemployment. As discussed elsewhere, though Chairman Bernanke has expressed a very credible intent to resist a return to higher inflation, his own remarks and those of other Fed officials already provide grounds for worry that they may, once again, be late in heading off trouble.  With a new flock of doves winging their way to the Fed, inflation worries have only gotten worse.