Bernanke promises to continue policies laid down by Greenspan

Ben Bernanke, US president George W Bush's choice to run the Federal Reserve, has promised to resist any political influence and to maintain continuity with the policies of his predecessor, Alan Greenspan.

Mr Bernanke, who is currently Mr Bush's chief economic adviser, made his promise at the start of a confirmation hearing before the senate banking committee.

"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," he said.

Unlike his predecessor, Mr Bernanke favours setting a target rate for inflation similar to the European Central Bank's (ECB) formula of close to 2 per cent.

However, he told senators he would try to build consensus around the idea before taking any action.

"I will take no precipitate steps . . . This matter requires further study at the Federal Reserve as well as extensive discussion and consultation," he said.

Some senators questioned Mr Bernanke closely on inflation targeting, particularly about the danger that too rigid an approach to inflation could hamper job growth, which is also part of the Fed's mandate.

Mr Bernanke said that setting an inflation target could be a step towards "greater transparency" and he went on to insist that there was no conflict between tackling inflation and encouraging job growth.

"Ensuring long-run price stability is essential for achieving maximum employment and overall economic stability," he said.

If Mr Bernanke is confirmed, he will succeed Mr Greenspan on January 31st, 2006, inheriting an economy that is growing at an annual rate of almost 4 per cent but has massive current account and budget deficits, high levels of personal debt, rising inflation and rising interest rates.

Mr Bernanke has promised to communicate clearly - in contrast to Mr Greenspan's opaque pronouncements - but otherwise to emulate his predecessor.

"Monetary policy is most effective when it is as coherent, consistent and predictable as possible, while at all times leaving full scope for flexibility and the use of judgment as conditions may require," he said.