In testimony to a confirmation hearing before the US Senate’s Banking Committee, Ben Bernanke vowed to follow the legacy of the Greenspan era and remain independent of political influence.

In an effort to reassure investors and the American public over Mr Greenspan’s departure after 18 years running the Fed, Mr Bernanke said in prepared remarks that “continuity” with his lauded predecessor’s regime was his “top priority”. “I’d like to emphasise . . . that I do in no way intend to make any significant changes to the overall approach to monetary policy that was developed under Chairman Greenspan,” said Mr Bernanke, who is currently chairman of the White House Council of Economic Advisers.

He did reiterate his past advocacy of a move by the Fed to a formal, British-style inflation target for the US central bank.

Mr Bernanke said that an explicit inflation target could help the Fed to achieve the dual goals of controlling inflation and boosting employment set for it by American law — comments which sought to play down concerns that an inflation target might dilute the Fed’s pursuit of jobs and strong growth. “I think it actually advances our ability to meet those mandates and increase employment growth,” he said.

He added that he would take no “precipitate steps” towards bringing in an inflation target without “extensive discussion” with fellow Fed governors.

He also emphasised that he did not believe that the Fed should follow any “mechanical rule” in setting policy, and underlined his belief in the need for flexibility and “the use of judgment”.

In a break from Mr Greenspan’s approach, Mr Bernanke said he would avoid comment on specific government tax and spending policies and played down the Fed’s potential influence over issues such as the US current account deficit.

US SALES RISE

Wall Street predictions of a sharp drop in US retail sales last month were confounded as American consumers carried on spending strongly. The headline measure of sales fell by 0.1 per cent against forecasts for a 0.7 per cent drop. After stripping out a 3.6 per cent drop in car purchases, sales rose by 0.9 per cent. Inflation worries were kept alive, however, as domestic fuel costs led to a sharp 0.7 per cent rise in the cost of goods leaving US factories last month.

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