Ben S Bernanke

With his message to the markets not to panic, Federal Reserve Chairman Ben S. Bernanke in effect signaled Wednesday that the central bank would again stand ready to try to head off any major financial crisis, analysts say. Bernanke told the House Budget Committee the day after Tuesday's global stock sell-off that the economy was in good shape and that the Fed was monitoring the markets.

Federal Reserve Chairman Ben S. Bernanke on Wednesday painted a portrait of an economy that was carefully -- and successfully -- balanced to produce healthy growth and low inflation. A prolonged slump in the housing market could cut into overall economic growth, Bernanke told the House Financial Services Committee in his semiannual report on the state of the economy. And a resurgence in consumer spending could rekindle inflation.

Federal Reserve Chairman Ben S. Bernanke's renewed emphasis on fighting inflation over stimulating growth puts him in a tough spot, analysts say, amid fears that a worsening housing slump could bring back "stagflation": slow economic growth paired with rising prices.

In his maiden appearance before Congress as Federal Reserve chairman, Ben S. Bernanke signaled that more interest rate increases were likely, a hint that he would follow in the inflation-fighting footsteps of his iconic predecessor, Alan Greenspan. But he also made it clear that plain-speak would replace the era of Greenspeak.

Ben S. Bernanke's four years as chairman of the Federal Reserve Board of Governors have been as challenging as any chairman's since the Depression. He moved with uncommon alacrity and creativity, forcing down interest rates and injecting hundreds of billions of dollars into the financial system after a series of high-profile collapses on Wall Street threatened to wreck the U.S. economy. No one can say for sure, but we (and many leading economists) are convinced that the recession would have been far worse had the Fed acted more timidly.

Ben Shalom Bernanke's first venture onto the national stage ended abruptly. He choked on the word "edelweiss" in the 1965 National Spelling Bee. The alpine flower was featured in the then-current hit "The Sound of Music," but the hamlet of Dillon, S.C., had no movie theater. Young Ben had to settle for the rank of No. 26 and forfeit any hope of the winner's true reward: appearing on "The Ed Sullivan Show," the most prominent television variety program of the era.

In three years of serving under Alan Greenspan on the Federal Reserve Board, Ben S. Bernanke sided with the chairman on every decision to move interest rates up or down or to leave them alone. But Bernanke, nominated Monday by President Bush to become the next Fed chairman, is no clone of the 79-year-old Greenspan, analysts say. Their distinctions are more in style than substance, but that could make a difference in interest rate policy and crisis management.

Optimism that the global economic expansion will keep rolling drove key U.S. stock indexes to record highs Wednesday. The Dow Jones industrial average topped 12,700 for the first time, rising 87.01 points, or 0.7%, to 12,741.86. In a sign of broad-based demand for stocks, the session marked the first time since 1998 that all three major Dow share indexes -- the industrials, the transports and the utilities -- swept to record levels simultaneously.

Nobody ever said Alan Greenspan would be an easy act to follow. But Ben S. Bernanke, marking his first anniversary as chairman of the Federal Reserve, is winning Greenspan-like plaudits for deftly steering the U.S. economy toward the promised land of steady growth and moderating inflation. With President Bush focused on Iraq and Treasury Secretary Henry M. Paulson shepherding most of Bush's domestic agenda, the nation's central banker is now more than ever the chief steward of the U.S. economy.

Ben S. Bernanke's honeymoon as the new Federal Reserve chairman is drawing to an end. Now comes the hard part. The Fed has reached a crunch point in its stewardship of the U.S. economy, and any misstep on Bernanke's part could have dramatic consequences. Inflation is picking up just as economic growth and job creation appear to be slowing. The housing boom is ending, and rising mortgage rates threaten to depress home prices and throttle consumer spending.