President Bush's nominee to be chairman of the Federal Reserve System pledges no major changes from the monetary policies of his predecessor. Ben Bernanke, who is expected to win easy confirmation to head the Fed, which is the U.S. central bank, began his confirmation hearings in the Senate Tuesday.
Appearing before the Senate Banking Committee, Ben Bernanke said he would continue the monetary policies started under outgoing Federal Reserve Chairman Alan Greenspan.
"In particular I'd like to emphasize to those concerned that I do in no way intend to make any significant change in the overall approach to monetary policy that was developed under Chairman Greenspan," said Mr. Bernanke.
The Fed, as it is commonly known in financial circles, sets monetary policy and regulates the U.S. banking system. It is headed by a seven-member Board of Governors, whose members are nominated by the president and confirmed by the Senate. Mr. Bernanke was a Board member previously before he became President Bush's chief economic advisor.
Mr. Bernanke is expected to win easy confirmation. However, Senator Tim Johnson, a Democrat from South Dakota, reminded Mr. Bernanke he will no longer be a presidential advocate, but will be expected to be nonpartisan.
"It's my expectation that the Fed chair, even when he is a former White House advisor, refrains from being a cheerleader for White House policies of either political party, and instead maintains the independence and credibility of the central bank through greater transparency in its decision-making," said Mr. Johnson.
Mr. Bernanke, who appeared before the committee one week ago as a presidential advisor, said he is mindful of the non-partisan nature of his potential new role.
"In this prospective new role, I would be responsible for preserving the independence and non-partisan status of the Federal Reserve - a status that in my view is essential to that institution's ability to function effectively and achieve its mandated objectives," added Mr. Bernanke. "I assure this committee that if I am confirmed, I will be strictly independent of all political influences, and will be guided solely by the Federal Reserve's mandate from Congress, and by the public interest."
Mr. Bernanke also promised more openness in the Federal Reserve's workings.
"A more transparent policy process increases democratic accountability, promotes constructive dialogue between policymakers and informed outsiders, reduces uncertainty in financial markets, and helps anchor the public's expectation of long-range inflation which, as I've argued already, promotes economic growth and stability," he explained.
But Mr. Bernanke said he does not favor holding public meetings of the Fed's Federal Open Market Committee, the decision-making body that sets monetary policy by, among other things, regulating the supply of money and setting key interest rates. He said open meetings of the committee would inhibit frank discussion and spark volatility in financial markets.