Bernanke era begins

Washington, Feb 1 | Updated: Feb 2 2006, 05:47am hrs
Ben Bernanke was sworn in as the 14th chairman of the Federal Reserve on Wednesday, replacing Alan Greenspan who retired after 18-1/2 years at the helm of the central bank.

Bernanke took the oath of office in the Fed boardroom, the bank said in a short statement. His four-year term as chairman ends on January 31, 2010 and his 14 year term as a member of the Feds Board of Governors expires on January 31, 2020.

Global financial markets watched the unfolding events, trying to assess what changes Bernanke, a former Fed governor, was likely to make at the central bank now he has the top job.

Bernanke, 52, is a widely respected monetary economist and a vocal proponent of inflation targeting at the Fed, a move that would create more formal policy rules than practiced by Greenspan, who relied heavily on intuition and flexibility.

But analysts were not predicting any seismic shifts. Although Bernanke does fully embrace the risk-management process that Greenspan favored ... hed like to bring in inflation targeting. (But) he must build consensus to do so and he doesnt have consensus now, said economist Diane Swonk of Mesirow Financial in Chicago.

I think hes going to make a smooth transition, but its going to be an evolution in policy change, she said.

Bernanke had three years as a Fed governor before moving to the White House in June to chair the Council of Economic Advisers. That helped him build a relationship with colleagues, one he has kept up through meetings with Fed vice-chairman Roger Ferguson and Governor Donald Kohn among others. Still, economists contend he must earn the kind of trust and credibility for inflation-fighting his predecessor enjoyed.

The departing Fed chiefs success in keeping inflation curbed leaves his successor, who met scant opposition from lawmakers, in a relatively strong starting spot.