Resident Scholar Vincent R. Reinhart

President Obama's decision to reappoint Federal Reserve Chairman Ben Bernanke was a welcome surprise. The news was not in the choice. Chairman Bernanke has done a good job at shepherding monetary policy over the past three and one half years. He got the big decisions right, easing quickly and acting creatively with the Fed's balance sheet. He also moved incrementally to provide more information about policy makers' outlook.

The blots on his record relate to decision in crisis management, which were fitful and inconsistent in 2008. But the Fed chairman was part of a team, and it is difficult and probably unfair to apportion responsibility.

The surprise comes from the timing of the announcement, five months before the Fed chairman's term is up. Leaving the incumbent twisting a while in the wind was probably tempting. A Fed chairman not sure of his job prospects might be less likely to ease his foot off the monetary accelerator, which has been pedal-to-the-metal for some time. Instead, the White House pulled a page from the Robert Rubin playbook of trying to calm the anxieties of financial market participants.

But two more surprises are in store.

First, the White House will likely learn that a Fed chaired by Ben Bernanke will follow a policy uncomfortably tight as the 2012 election looms into sight. Bernanke has espoused a commitment to low inflation over his entire career. He also is a democratic and consultative chairman, so the voices of monetary conservatives among Fed officials will be heard loudly and frequently.

Second, Chairman Bernanke's surprise will be that the validation of a second term, while no doubt personally rewarding, will not be worth much in the ongoing bureaucratic battle over regulatory powers and the structure of the Fed. The Congress has justifiable concerns about giving the institution more authority, and the competition among the agencies will be fierce.

Vincent R. Reinhart is a resident scholar at AEI.