Bush reportedly to nominate two for Fed board

Bernanke and Kohn both inflation fighters

May 07, 2002|By BLOOMBERG NEWS

WASHINGTON - Ben S. Bernanke, a Princeton University economist, and Donald Kohn, a senior staff member of the Federal Reserve, will be nominated this week by President Bush to fill two vacancies on the Fed Board of Governors, two senior administration officials said yesterday.

The announcement may come as early as today, said the officials, who spoke on condition that they not be identified. Both positions require Senate confirmation.

Their nominations would add to the board two economists with strong inflation-fighting credentials, analysts said. Bernanke promotes the idea of setting a target for inflation, while Kohn is a longtime confidant of Chairman Alan Greenspan, who's argued that price stability is the best way to ensure economic growth.

"Both are excellent choices, because each brings something to the Fed that will help institutionalize the Greenspan legacy," said Christopher Low, chief economist at First Tennessee Capital Markets in New York.

Bernanke, 48, has been the Howard Harrison and Gabrielle Snyder Beck Professor of Economics and Public Affairs at Princeton since 1996. He serves on the National Bureau of Economic Research's business-cycle dating committee, the group that declared in November that the world's largest economy slipped into recession last March for the first time in a decade.

Kohn, 59, advises Greenspan on monetary policy and has helped write several of his speeches. He also serves as secretary to the Federal Open Market Committee, which votes on interest rates. Last June, he was appointed as adviser to the Fed board for monetary policy, after 13 years as head of the Fed's Division of Monetary Affairs.

Bernanke didn't return calls from reporters, and Kohn and the Fed referred questions to the White House.

The two open seats on the Fed board were created by the departures of Laurence Meyer and Edward Kelley. Fed governors all serve as voting members of the FOMC, which sets interest rate policy.

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