MercoPress. South Atlantic News Agency

Fed chairman nominee promises “continuity”

President George W Bush nominated Tuesday his chief economic advisor, Ben Bernanke to succeed Alan Greenspan as United States Federal Reserve chairman.

If confirmed by the Senate, the very loyal and Republican Bernanke, 52, will become as of February 1 the second most important man in United States and a leading figure in world monetary policy. He had long been tipped as the main candidate to replace Alan Greenspan who will end his 18 year tenure in January, a revered figure among central bankers and monetary experts.

On making the announcement President Bush called for swift action from the Senate saying "he will be an outstanding chairman of the Federal Reserve".

"I will do everything in my power, in collaboration with my Fed colleagues to help assure the continued prosperity and stability of the American economy", said Mr. Bernanke adding that "my first priority will be to maintain continuity with the policy and policy strategies under the Greenspan era".

"In Ben Bernanke, the President has chosen the right person to carry on the strong, independent leadership of the Federal Reserve, said US Treasury Secretary John Snow.

Mr. Bernanke has an impeccable academic background. He graduated top of the class in Harvard in 1975 and went on to complete a PhD in Massachusetts Institute of Technology. He was professor in several of the most prestigious US universities ending as head of Princeton's Economics Department.

In 2002 President Bush named him to the Federal Reserve Open Market Committee which sets monetary policy in US and has been chaired by Mr. Greenspan for the last 18 years. Earlier this year he was appointed chairman of the White House Council of Economic Advisors.

Wall Street welcomed the nomination since it ended months of speculation about who World become the fourteenth Fed chairman. "He's well respected in terms of his knowledge and his experience at the Fed. He is seen as a very capable and credible candidate that would prove reassuring in the near term", remarked Mark Ovalle, a Wall Street financial expert.

The naming of the Fed chairman is possibly one of the most crucial decisions for a United States president since his influence will be far reaching; he can be re-nominated every four years until he retires as happened with Mr. Greenspan. Therefore the Senate hearings are expected to be very demanding. Critics of Mr. Bernanke point out to the fact he has limited experience outside the academic world and Senators could judge him too close, and loyal, to the Republican Party and particularly to the Bush administration given his three political appointments. Although it must be said not all Republicans consider him a "team player".

Mr. Bernanke is a leading advocate of "inflation targeting" -an approach widely adopted in United Kingdom and the Euro zone- under which central banks set a target for inflation and stick to it, which supporters argue has helped to lower inflation expectations among the public.

However, Mr Greenspan believes central banks should keep markets guessing on how tough they would be on inflation. But Mr. Bernanke coincides with the current chairman that it is difficult for central banks to intervene to prevent "asset bubbles" like house price booms from taking place.