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Bernanke: Stay the course

Photographers surround White House Chief Economic Adviser Ben Bernanke as he prepares to testify before the Senate Banking Committee on Capitol Hill on Tuesday during a confirmation hearing on his nomination to be the next Federal Reserve Board Chairman. (Associated Press / The Spokesman-Review)
Associated Press
Photographers surround White House Chief Economic Adviser Ben Bernanke as he prepares to testify before the Senate Banking Committee on Capitol Hill on Tuesday during a confirmation hearing on his nomination to be the next Federal Reserve Board Chairman. (Associated Press / The Spokesman-Review)

WASHINGTON – Ben Bernanke, the president’s chief economist, told senators Tuesday he’ll continue the policies of Alan Greenspan if confirmed as Federal Reserve chairman and will make sure the central bank remains free of political influence.

Senate Banking Committee members, at a three-hour hearing on President Bush’s choice to head the Fed after Greenspan retires, largely expressed confidence in the man who would take over a position seen by many as the second-most influential job in America.

Maintaining continuity with Greenspan’s policies is a top priority, Bernanke said.

“I intend to be flexible and to learn from experience,” he said. “But I believe the right starting point is the point where we currently are, that Chairman Greenspan has demonstrated in his policymaking.”

Bernanke also sought to assure lawmakers, investors and the public that he would make decisions on interest rates and other matters based on economic considerations, not political ones. “I will be strictly independent of all political influences,” he said.

If confirmed as expected, Bernanke will lead the Fed at a time when the economy faces challenges, including bloated budget and trade deficits and worries about whether the high-flying housing market will crash. There also are concerns about high energy prices and the lackluster jobs market.

“All of your intellectual horsepower is going to be needed,” said Sen. Debbie Stabenow, D-Mich.

Bernanke, 51, is a former Princeton professor and Fed governor who now serves as chairman of the White House Council of Economic Advisers. Lawmakers and the administration want him ready to take over when Greenspan retires Jan. 31, after 18-plus years at the helm.

Senators intend to act on Bernanke’s nomination “as soon as possible,” said committee chairman Richard Shelby, R-Ala.

Bernanke said he would move slowly and seek to build a consensus on the notion of inflation targeting – that is, numerically spelling out acceptable bounds for inflation. That’s one area where he and Greenspan differ. Bernanke supports a numerical inflation target, Greenspan doesn’t.

“Senators peppered Bernanke with questions about a wide range of issues including the trade and federal budget deficits.

While he said bloated budget deficits are a problem and must be curbed, he also said he didn’t want to weigh in on various fiscal proposals.