Although the Federal Reserve has not announced a numerical inflation target, Ben Bernanke, the nominee to become Fed chairman in February, is on record favoring such a target. Although I am also on record favoring a formal numerical target, I believe the issue has not been a large one in the United States. Many observers believe that the Fed has been pursuing an inflation target range of 1-2 percent annual rate of increase of the core PCE price index. If the Fed does adopt a formal target in the future, I doubt very much that statistical tests for a regime break would be able to find one in an economic series such as an inflation index, employment or real GDP.

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.

The President has made a distinguished appointment in Ben Bernanke. Ben comes with superb academic credentials and important insights into the ways our economy functions. I have no doubt that he will be a credit to the nation as Chairman of the Federal Reserve Board.