Bernanke faces Capitol Hill balancing act

Washington, Nov 14 | Updated: Nov 15 2005, 06:20am hrs
Ben Bernanke, President George W Bushs pick to succeed Alan Greenspan at the US Federal Reserve, heads to Capitol Hill on Tuesday with two key tasks: convincing financial markets hell be tough on prices, while reassuring lawmakers hes no inflation nutter. The balancing act Mr Bernanke will need to perform as he testifies before the Senate Banking Committee, will be only the first of many he will face as chairman of the central bank.

Like Greenspan, the Fed governor-turned-White House adviser will need to navigate tough political straits again and again if he wins Senate confirmation, as widely expected.

His central theme this week, analysts and associates agree, will be one he stressed last month when Mr Bush tapped him to replace Greenspan after 18 years at the Feds helm.

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 the day Bush nominated him. The carefully-crafted message was intended to ease concerns he would initiate wholesale changes at the Fed. As one of the nations leading academics on monetary issues, the vocal Bernanke has been at the forefront of a push to get the US central bank to publicly state a target for acceptable inflation, a step Greenspan has opposed.

Democrats are expected to seek assurances from the former Princeton professor that the Fed will never forget Congress gave it two goals price stability and full employment and that one will not be sacrificed to achieve the other.

Theres an obvious question to be asked, said Maryland Senator Paul Sarbanes, the top Democrat on the banking panel, when Bernanke was nominated. How are you going to sustain that continuity if youve been articulating a different standard