Excerpted from November 4, 2005, Solutions News Extra
By John Suter , CFC Vice President, Capital Markets Funding
Alan Greenspan, Chairman of the Federal Reserve for 18 years, will be replaced this January when his term expires. President Bush has nominated Ben Bernanke to fill the position.
The initial market reaction has been favorable based on Bernanke’s excellent background: strong academic credentials, extensive practical training in monetary policy, experience as a Fed governor, an apolitical approach to policy decisions, a strong belief in the independence of the Federal Reserve and a central belief that inflation containment is the primary goal of the Fed. Even so, Bernanke has big shoes to fill.
Financial markets want the Fed chairman to deliver all the goods: full employment, sustained economic growth, low interest rates, price stability and a strong stock market. Due to several changes, however, the Fed has less influence on the economy now than when Greenspan took his position in 1987. The Fed is still a big player, but it can only indirectly influence what happens in the economy as a whole.
Read entire Solutions article on Bernanke's appointment as Federal Reserve Board Chairman.
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