By Steve Schifferes
BBC News business reporter
Ben Bernanke has been chosen to succeed the respected head of the US Federal Reserve, Alan Greenspan.
Current job: Chairman, Council of Economic Advisors
Former job: Professor of Economics, Princeton
Strength: Outspoken advocate of inflation targeting
Weaknesses: Limited non-academic experience
Mr Bernanke, a Princeton economist who was appointed chairman of the council of economic advisers in June, is therefore the government's chief economic adviser.
Mr Bernanke spent most of his career as Princeton economics professor before becoming a member of the Fed's board of governors in 2002.
He is a leading advocate of "inflation targeting", the idea that central banks should set a target for inflation - in the UK it is 2% - and stick to it.
This approach was opposed by Mr Greenspan, who believed central banks needed to keep the markets guessing on how tough they would be on inflation.
Mr Bernanke's approach is widely adopted in Europe, by both the Bank of England and the European Central Bank, and supporters say it has helped to lower expectations of inflation among the public.
His appointment was widely welcomed by financial markets - where traders have become familiar with his approach.
"Bernanke has continuity with Greenspan," said Alex Beuzelin, analyst with Ruesch International.
"The risk would have been coming out with someone the market doesn't know, or who is a monetary hawk."
But not everyone agreed.
"Of all the Fed governors, Bernanke is the one I would be most fearful of," Michael Metz, chief investment strategist at Oppenheimer Holdings, told Reuters news agency.
"He is too fast with the trigger and his take on inflation and deflation has been proven wrong."
Neither is the appointment popular among Republican loyalists who do not see him as a team player.
Mr Bernanke, like Mr Greenspan, believes that it is difficult for central banks to intervene to prevent "asset bubbles", such as house price booms, from taking place.
Tough job ahead
Mr Bernanke will face a difficult economic climate.
In the short term, the Fed is coming under pressure to stop raising interest rates in order to help the US economy recover after Katrina.
Especially now that inflationary concerns have eased with a drop in the price of oil.
However, the US housing market bubble is showing signs of collapse, which could further reduce consumer spending.
And in the longer term, the growing trade deficit and large budget deficit could put increased pressure on the US dollar - another of the Fed's responsibilities.
Reappointed three times
Mr Bernanke's performance will be closely scrutinised, not least since his predecessor, Mr Greenspan, has been widely regarded as the key architect of US economic policy, and is the world's most powerful central banker.
Mr Greenspan is stepping down in January
During his tenure as Federal Reserve chief, he has steadied markets during financial crises, endorsed budget and tax reform, and led the fight against inflation.
During his period of office, Mr Greenspan's every remark was scrutinised by Congress, financial analysts and journalists for evidence of where US economic policy was heading.
Mr Greenspan has also had his critics, especially those who say that the Federal Reserve should have acted more decisively to curb the dot.com stock market bubble in the late 1990s, and rein in the current housing boom.
But he has been reappointed by three Presidents, Republican and Democrat alike.
Now - approaching 80 years of age - he has finally stepped down on 31 January.
The appointment of Mr Bernanke may prove key to how the world sees the US, analysts said.
With Mr Bush's economic plans for tax reform and social security reform stalled in Congress, observers say an independent chairman of the Fed is crucial to establishing economic credibility.
Mr Bush himself, discussing the appointment in early October, reaffirmed this.
"It's important that whomever I pick is viewed as an independent person from politics," he said recently.
"It's this independence of the Fed that gives people not only here in America, but the world, confidence."