In Ben Bernanke's opening statement at his confirmation hearing before the Committee on Banking, Housing, and Urban Affairs, he emphasizes:
- Continuity from Greenspan
- Maintaining independence and non-partisanship
- Long-term price stability as an important goal
- Flexibility as reflected, e.g., in the risk management approach
- Explicit inflation targets, but he won't move in that direction immediately or without a broad consensus
- Maintaining stability and equity in financial markets
Statement of Ben S. Bernanke before the Committee on Banking, Housing, and Urban Affairs United States Senate November 15, 2005:... I recently testified before this Committee in my capacity as Chairman of the President’s Council of Economic Advisers. Today, however, I appear before this Committee in a different capacity, as the President’s nominee to lead the Federal Reserve System. In this prospective new role, I would bear the critical responsibility of preserving the independent and nonpartisan status of the Federal Reserve--a status that, in my view, is essential to that institution’s ability to function effectively and achieve its mandated objectives. 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.
With respect to monetary policy, I will make continuity with the policies and policy strategies of the Greenspan Fed a top priority. ... First, central bankers in the United States and around the world have come to understand that ensuring long-run price stability is essential for achieving maximum employment and overall economic stability. In recent decades, the variability of output and employment has decreased markedly, and recessions have been less frequent and less severe. ... If I am confirmed, I am confident that my colleagues on the Federal Open Market Committee (FOMC) and I will maintain the focus on long-term price stability ...
Second, monetary policy at the Fed has been executed with both careful judgment and flexibility. ... Chairman Greenspan’s risk-management policy approach ... approach requires sophisticated judgments about possible risks to the economy as well as the flexibility to respond quickly to new information or unexpected developments. Risk analysis of this type is a necessary component of successful monetary policymaking. ... 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.
Finally, under Chairman Greenspan, monetary policy has become increasingly transparent to the public and the financial markets, a trend that I strongly support. ... One possible step toward greater transparency would be for the FOMC to state explicitly the numerical inflation rate or range of inflation rates it considers to be consistent with the goal of long-term price stability ... I have supported this idea in my academic writings and in speeches as a Board member. Providing quantitative guidance about the meaning of “long-term price stability” could have several advantages, including further reducing public uncertainty about monetary policy and anchoring long-term inflation expectations even more effectively. ... I assure this Committee that, if I am confirmed, I will take no precipitate steps in the direction of quantifying the definition of long-run price stability. This matter requires further study at the Federal Reserve as well as extensive discussion and consultation. I would propose further action only if a consensus can be developed that taking such a step would further enhance the ability of the FOMC to satisfy its dual mandate of achieving both stable prices and maximum sustainable employment.
My comments so far today have focused on monetary policy. Of course, the Federal Reserve’s responsibilities extend well beyond this area. Since its founding, the Federal Reserve has been given substantial responsibility for protecting the stability of the nation’s financial system, which is a precondition for stability of the broader economy. ... If I am confirmed, I will work to enhance the stability of the financial system and to ensure that the resources, procedures, and expertise are in place as needed to respond to any threats to stability that may emerge. The Federal Reserve, along with other regulators, is also engaged in trying to ensure that consumers are treated fairly in their financial dealings: that their privacy is protected, that they receive clear and understandable information about the terms of financial agreements, and that they are not subject to discriminatory or abusive lending practices. ... These are important responsibilities and, if I am confirmed, I will give them my close attention and active support. ...
Let me conclude by offering special thanks to Chairman Greenspan for his collegiality and support ... One may aspire to succeed Chairman Greenspan but it will not be possible to replace him...