Bernanke likely to succeed Greenspan

BEN BERNANKE has emerged as the leading contender to succeed Alan Greenspan as chairman of the US Federal Reserve, analysts said today, after he was nominated by George Bush to head the White House Council of Economic Advisers. 'This [CEA] is a job for Bush loyalists only,' ING said in a note to clients today. 'The appointment makes Bernanke the front runner to replace Greenspan as Fed chairman.'

Greenspan, 79, has dominated the conduct of US monetary policy since he was appointed to the Federal Reserve in 1987 by President Ronald Reagan.

But his term as a Fed governor - a post that may not be reappointed - ends on 31 January next year, triggering a race to fill his formidable shoes. Bernanke, 51, chaired the economics department at Princeton University before he took up a post as a Fed governor in August 2002.

He was named last Friday as Bush's choice for the CEA, a position that requires approval by the Senate. In that role, he will advise the administration on assessing the impact of US economic policy. Greenspan himself chaired the CEA between 1974 and 1977 under Gerald Ford.

In the past two years Bernanke has promoted greater public debate about the Fed's role. He is a staunch advocate of inflation targeting, identifying a precise figure towards which monetary authorities should try to steer inflation.