Bush’s pick for Reserve chief

If backed by the Senate, Mr Bernanke will replace Alan Greenspan who has headed the central bank of the world’s largest economy for 18 years.

But experts said they do not expect the nomination will run into trouble on Capitol Hill.

Mr Bernanke, 51, was a member of the Federal Reserve before moving to the White House earlier this year to head the President Bush’s Council of Economic Advisers.

“He’s earned a reputation for intellectual rigor and integrity,” said President Bush at a brief appearance with Mr Bernanke at the White House.

“He commands deep respect in the global financial community. And he’ll be an outstanding chairman of the Federal Reserve,” he said.

Market reaction

Reaction from Wall Street was positive but both bonds and the US dollar fell.

US stocks rose sharply at the announcement with the Dow Jones, S&P and Nasdaq indexes each gaining more than one percent.

Drew Matus, economist at Lehman Brothers, said the markets’ reaction was favourable.

“Largely because it’s someone we know and, we were concerned it might be something like (Bush’s controversial nomination of Harriet Miers at) the Supreme Court,” he said.

But there’s some concern within financial circles that Mr Bernanke will tolerate inflation for stronger economic growth.

The concern was enough to hurt the US dollar that slipped slightly against major currencies.

End of an era

Alan Greenspan will step down in January after 18 years in one of the most powerful economic posts in the United States.

President Bush acknowledged that Mr Bernanke would have difficult shoes to fill after the tenure of Mr Greenspan.

“For nearly two decades, Chairman Greenspan has shepherded our economy through its highs and its lows,” President Bush said.

“He’s played a major role in America’s strong economic growth. He has dominated his age like no central banker in history. He has contributed to a better life for all Americans,” he said.

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