WASHINGTON -- New Federal Reserve chairman Ben Bernanke said yesterday the economy is on track for good growth this year, sticking closely to predecessor Alan Greenspan's script with one big difference: His comments were much easier to understand.
In his debut congressional testimony as Fed chairman, Bernanke signaled that the central bank, which has raised interest rates 14 times since June 2004, stood ready to boost rates more if needed to combat inflation.
Investors and private economists, who had been apprehensive that Bernanke might sound a tougher line on inflation than Greenspan, said they detected no switch in policy from the Greenspan Fed. ''Bernanke kept very much to the promise he made at his confirmation hearing that he would maintain continuity with Greenspan" said David Jones, chief economist at DMJ Advisors, a private forecasting firm in Denver. Wall Street took Bernanke's testimony in stride --the Dow Jones industrial average rose 30.58 points to 11,058.97.
A respected economics professor at Princeton before entering government service as a Fed governor in 2002, Bernanke demonstrated during more than three hours of grilling from the House Financial Services Committee that he was up to the task of answering questions without upsetting financial markets.
Several committee members in fact complimented Bernanke for his straightforward answers, a contrast to Greenspan, who mastered the art of using complex sentences to dodge questions he did not want to answer.
Private economists predicted the central bank will raise the federal funds rate by a quarter point to 4.75 percent at Bernanke's first meeting on March 27-28.
Bernanke said future rate hikes would depend on incoming economic data. But he said despite last year's surge in energy prices and the devastation from the Gulf Coast hurricanes, recent information showing strong employment growth and retail sales in January ''suggests that the economic expansion remains on track."