Obama to reappoint Bernanke to lead Fed – official

By Reuters Staff
August 25, 2009

Chairman of the Federal Reserve Ben Bernanke testifies before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill in Washington July 22, 2009.  By Patricia Zengerle and Ross Colvin
OAK BLUFFS, Mass., Aug 24 (Reuters) – U.S. President Barack Obama will reappoint Ben Bernanke for a second term as chairman of the Federal Reserve on Tuesday, a senior administration official said on Monday.

Bernanke, whose four-year term as head of the U.S. central bank ends on Jan. 31, 2010, will also be praised by Obama for his handling of the financial crisis, the official said.

Financial markets have given Bernanke high marks on the job and his reappointment was widely forecast, although a White House announcement was not expected until later this year.

Bernanke, 55, was appointed by President George W. Bush to succeed Alan Greenspan and is a widely respected monetary scholar who has long called for a more open central bank.

In remarks prepared for delivery at an event in Massachusetts, where Obama is on vacation, the president will also say the U.S. auto industry is “showing signs of life” and the U.S. credit and housing markets have been “saved from collapse,” the official said.

“The man next to me, Ben Bernanke, has led the Fed through one of the worst financial crises that this nation and this world have ever faced,” Obama will say in a statement to the media at 9 a.m. EDT (1300 GMT).

Bernanke has led the Fed and the U.S. economy during its most tumultuous period since the Great Depression of the 1930s. The announcement on Tuesday will end any lingering worries about who might head the central bank as the economy recovers.

Bernanke has mapped out his strategy to pull back the U.S. economy from exceptionally low interest rates and extricate the Fed from a flood of loans to financial markets without sparking unwanted inflation. (Editing by John O’Callaghan)

See below — INSTANT VIEW:

COMMENTARY:
CHENG CHENG-MOUNT, ECONOMIST FOR HONG KONG AND TAIWAN, CITIGROUP
“I think most of Asia will welcome Bernanke’s reappointment. He has done a lot in trying to fix the global financial crisis and I believe with his reappointment and efforts that is going to increase risk appetite, which will be good for Asia.
“He is also a familiar face and people have gotten used to his policies. If the U.S. had appointed someone new, that will create more market uncertainty.”

TAKAHIDE NAGASAKI, CHIEF FX STRATEGIST, DAIWA SECURITIES SMBC, TOKYO
“Financial markets had thought that there was a good chance Bernanke would be reappointed.
“When you look at responses to last year’s financial crisis, bold action was taken and the market reacted to that favourably. I don’t think there will be any major impact but it should be positive for markets such as the stock and bond markets in the sense that an element of uncertainty has been removed.”
PATRICK BENNETT, STRATEGIST, SOCIETE GENERALE, HONG KONG
“If you look back and see what Bernanke has done over the last couple of years the general consensus is that an appropriate policy has been delivered. To even suggest that he may not be returned at this stage would be a very dangerous thing and introduce uncertainty to the market, which would not be welcome right now.”
STEPHEN ROBERTS, ECONOMIST, NOMURA AUSTRALIA, SYDNEY
“There was never a doubt he would be reappointed. He has had to face huge challenges, namely the credit crisis and related downturn.
“He has dealt with it promptly and avoided a depression. So far, so good. But there are challenges ahead and he will have draw on his own experience and learn from Japan’s policy initiatives in tackling depression, which were very often too late.”

MARKET REACTION:
- Financial market reaction to the news was muted; U.S. stock futures <SPc1> were marginally lower following a lacklustre performance overnight on Wall Street.

BACKGROUND: – Bernanke, 55, was appointed by President George W. Bush to succeed Alan Greenspan and is a widely respected monetary scholar who has long called for a more open central bank.

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Good Move Obama keep up the good work..