Bernanke to stay on course set by Greenspan

WASHINGTON – Ben Bernanke, President George W Bush’s choice to be the next chairman of the Federal Reserve, is making it perfectly clear that his top priority would be to continue Alan Greenspan’s legacy – a comment that is music to investors’ ears.

The stock market soared, with the Dow Jones industrial average enjoying its best one-day performance in six months, climbing by 170 points, after Bush announced on Monday his nomination of Bernanke, the president’s top economic adviser. Bernanke, 51, is expected to win easy Senate confirmation although some Democrats said they planned to quiz him on his ability to protect the independence of the Fed.In a brief White House ceremony, both Bush and Bernanke praised Greenspan, 79, who will step down at the end of January after having served 18 years and five months as Fed chairman, longer than anyone except another Fed legend, William McChesney Martin, who was first appointed by Harry Truman and served for 18 years and nine months.Bush praised Greenspan, who attended the ceremony, for keeping inflation low and economic growth strong while Bernanke said Greenspan had shown the world the best way to run monetary policy.”If I’m confirmed to this position, my first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years,” said Bernanke, who was viewed as one of the country’s leading experts on central bank operations during his tenure as an economics professor at Princeton University.Bush tapped Bernanke in 2002 to serve on the Fed board.Since June he has been chairman of Bush’s Council of Economic Advisers.Greenspan called Bush’s decision a “distinguished appointment” and said that Bernanke would bring to the chairmanship “superb academic credentials and important insights into the way our economy functions.”Private analysts said they did not expect any major changes in the way monetary policy is handled under Bernanke, who never dissented from the Greenspan-led decisions on interest rates during his nearly three years at the Fed.They also saw the appointment of Bernanke as way for the White House to quell some of the furore over Bush’s Supreme Court nomination of White House counsel Harriet Miers, who has been attacked by conservatives as unqualified.”Bernanke may be the perfect counterpoint to the Harriet Miers selection,” said David Jones, chief economist at DMJ Advisors, a Colorado consulting firm.Sen.Richard Shelby, a Republican who is chairman of the Senate Banking Committee, said he hoped his committee could vote on the Bernanke nomination by the end of November, and the full Senate could act before leaving town for the year.That would ensure that Bernanke could take over on February 1, the day after Greenspan’s board term ends.Bernanke won praise from both Republican and Democratic senators although Democrats said they planned to question him closely to ascertain whether he will be able to maintain the Fed’s independence given his service in the Bush administration.Some Democrats said they also would question Bernanke over one of the few areas where he disagreed with Greenspan.Bernanke believes the Fed should establish a target or range for inflation so that the public would have a better idea of the Fed’s goals.Greenspan rejected this approach, saying it could tie policy-makers’ hands.Democrats are worried that establishing a fixed target for inflation while bolstering the Fed’s battle against inflation could push the central bank to slight its other legal mandate to pursue policies that maximise employment.During his time on the Fed, Bernanke pushed the traditionally secretive institution to be more open to the public, winning a campaign to get the Fed to release the minutes of its closed-door rate-setting meetings sooner and also campaigning for the Fed to more fully explain its rate decisions.- Nampa-APBernanke, 51, is expected to win easy Senate confirmation although some Democrats said they planned to quiz him on his ability to protect the independence of the Fed.In a brief White House ceremony, both Bush and Bernanke praised Greenspan, 79, who will step down at the end of January after having served 18 years and five months as Fed chairman, longer than anyone except another Fed legend, William McChesney Martin, who was first appointed by Harry Truman and served for 18 years and nine months.Bush praised Greenspan, who attended the ceremony, for keeping inflation low and economic growth strong while Bernanke said Greenspan had shown the world the best way to run monetary policy.”If I’m confirmed to this position, my first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years,” said Bernanke, who was viewed as one of the country’s leading experts on central bank operations during his tenure as an economics professor at Princeton University.Bush tapped Bernanke in 2002 to serve on the Fed board.Since June he has been chairman of Bush’s Council of Economic Advisers.Greenspan called Bush’s decision a “distinguished appointment” and said that Bernanke would bring to the chairmanship “superb academic credentials and important insights into the way our economy functions.”Private analysts said they did not expect any major changes in the way monetary policy is handled under Bernanke, who never dissented from the Greenspan-led decisions on interest rates during his nearly three years at the Fed.They also saw the appointment of Bernanke as way for the White House to quell some of the furore over Bush’s Supreme Court nomination of White House counsel Harriet Miers, who has been attacked by conservatives as unqualified.”Bernanke may be the perfect counterpoint to the Harriet Miers selection,” said David Jones, chief economist at DMJ Advisors, a Colorado consulting firm.Sen.Richard Shelby, a Republican who is chairman of the Senate Banking Committee, said he hoped his committee could vote on the Bernanke nomination by the end of November, and the full Senate could act before leaving town for the year.That would ensure that Bernanke could take over on February 1, the day after Greenspan’s board term ends.Bernanke won praise from both Republican and Democratic senators although Democrats said they planned to question him closely to ascertain whether he will be able to maintain the Fed’s independence given his service in the Bush administration.Some Democrats said they also would question Bernanke over one of the few areas where he disagreed with Greenspan.Bernanke believes the Fed should establish a target or range for inflation so that the public would have a better idea of the Fed’s goals.Greenspan rejected this approach, saying it could tie policy-makers’ hands.Democrats are worried that establishing a fixed target for inflation while bolstering the Fed’s battle against inflation could push the central bank to slight its other legal mandate to pursue policies that maximise employment.During his time on the Fed, Bernanke pushed the traditionally secretive institution to be more open to the public, winning a campaign to get the Fed to release the minutes of its closed-door rate-setting meetings sooner and also campaigning for the Fed to more fully explain its rate decisions.- Nampa-AP