Bush picks Bernanke to be next Fed chair

U.S. President George Bush has chosen one of his top economic advisers, Ben Bernanke, to succeed Alan Greenspan as head of the powerful Federal Reserve.

Bush announced the appointment at the White House Monday afternoon, flanked by Bernanke and Greenspan. His appointment must be confirmed by the U.S. Senate, but a smooth confirmation hearing is expected.

Bernanke is currently the chairman of the President's Council of Economic Advisers and was long considered a favourite to replace Greenspan. He was a member of the Fed's board of governors from August 2002 until this past June and is widely respected.

Bernanke has a doctoral degree from Massachusetts Institute of Technology and is a former chairman of the economics department at Princeton University. He's known for speaking his mind.

His views on monetary policy are similar to Greenspan's, but he differs on some points. For one thing, he thinks the Fed should publicly set a specific inflation target, much as the Bank of Canada does. Currently, the Fed does not spell out any target.

Bernanke pledges 'continuity'

In his remarks at the White House Monday, Bernanke pledged no sudden change in Fed monetary policies.

"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," he said.

Bush praised Bernanke's record, saying he "commands deep respect in the global financial community." U.S. stock markets rallied when reports of Bernanke's selection began circulating.

The president also lauded Greenspan's Fed leadership.

"Under his steady chairmanship, the United States economy has come through a stock market crash, financial crises, from Mexico to Asia, two recessions, corporate scandals, and shocks ranging from devastating natural disasters to a terrorist attack in the heart of America's financial center," Bush said.

Greenspan served under 4 presidents

Greenspan will step down as Fed chair at the end of January.

The 79-year-old Greenspan is the second-longest serving chairman of the Fed, behind only William McChesney Martin Jr., who headed the U.S. central bank for almost 19 years in the 1950s and 1960s.

Greenspan was originally appointed Fed chair in August 1987. Former President Ronald Reagan nominated him to succeed Paul Volcker.

Greenspan served under four presidents, including Reagan, George H.W. Bush, Clinton, and George W. Bush.