Bernanke Expected To Maintain Course

Bernanke Expected To Maintain Course

Praised for urging China on currency.

How much like Alan Greenspan will Ben Bernanke be as America's central banker? Don't expect a radical shift in policy.

"If I am confirmed to this position, my first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years," Bernanke said when his nomination was announced at the White House on Oct. 24. He is expected to assume the role around Feb. 1 following a smooth Senate confirmation.

Indeed, John Engler, president of the Washington, D.C.-based National Association of Manufacturers (NAM), expects Bernanke to continue Greenspan's "independent work at ensuring U.S. competitiveness, spurring productivity and continuing the path of strong non-inflationary economic growth." Revisiting a cause the NAM has championed for more than two years, Engler also notes that Bernanke "has urged the Chinese government to move toward greater exchange rate flexibility."

Bernanke's first challenge, however, will be to damp down inflation arising from soaring energy prices without driving the U.S. economy in the direction of recession.

Ben Bernanke

"Bernanke is a strong advocate of inflation targeting, but as simple and elegant as that sounds, it can prove an unrealistic goal," says Peter Morici, a professor at the University of Maryland's Smith School of Business in College Park. "These days, too much of the inflation challenge stems from structural issues beyond the control of the Fed -- for example, hypergrowth in China and the resulting pressures on oil prices, and [for example,] the [domestic] mismanagement of energy policy and resulting shortages of refining and natural gas capacity," he explains.

Morici, nevertheless, is reserving judgment on Bernanke. "Just like a Supreme Court nominee, we won't really know how Bernanke will vote until he is on the job," Morici says.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.