A surging stock market yesterday suggested rousing approval on Wall Street of President Bush's choice of Ben S. Bernanke to head the Federal Reserve.

But on the biggest issue facing Alan Greenspan's successor — how much higher to raise interest rates, and how long to keep them up — investors and consumers don't have much insight into Bernanke's views.

If approved by the Senate, Bernanke, chairman of the White House's Council of Economic Advisors, would step into the job at the nation's central bank at what could be a crucial moment: For the first time in more than a decade, inflation worries are mounting, largely because of the surge in energy costs.

The Fed may have to choose between strong economic growth and stamping out inflation by tightening credit more significantly than it already has. Under Greenspan, the Fed has raised its key short-term rate 11 times since mid-2004, to a four-year high of 3.75 percent.

And just as Greenspan faced a raging stock market when he took over the Fed in the summer of 1987, Bernanke would have to deal with a red-hot housing market that could be snuffed out by higher interest rates.

Bernanke "is going to be immediately tested," said Bill Gross, who as chief investment officer of Pacific Investment Management Co. in Newport Beach, Calif., manages the world's biggest bond fund. For owners of fixed-rate bonds, higher inflation is public enemy No. 1.

Bernanke's image on Wall Street has been largely shaped by comments he made in November 2002, in what's now known as the "helicopter speech." In that address, Bernanke, then a Fed governor, focused heavily on the risk that the then-struggling economy could fall into deflation, meaning a downward spiral of prices and wages.

Bernanke laid out how the Fed had many tools it could use to spur consumer and business spending, including by jumping into the bond market to directly buy Treasury securities in an effort to push down longer-term interest rates. Combined with federal tax cuts, he said, the effect would be a "helicopter drop" of money into the economy — a phrase coined by eminent economist Milton Friedman.

The speech left many analysts with the view that Bernanke would always tilt toward supporting economic growth, perhaps even if inflation, not deflation, was the issue.

But some experts say the characterization is unfair.

"A lot of people perceive him as dovish on inflation. I don't think that's really true," said Bill Dudley, economist at brokerage Goldman Sachs & Co. in New York. The helicopter speech, Dudley said, was made at a time when deflation was a legitimate concern, and Bernanke was merely reflecting that.

Now, energy-driven inflation is the obvious worry, not deflation, economists say. And some believe that Bernanke wouldn't be any less tolerant of higher inflation than Greenspan.

Ethan Harris, economist at Lehman Bros. in New York, said Bernanke had previously indicated a "comfort range" of 1 percent to 2 percent on a key inflation gauge, the so-called personal consumption expenditures deflator. If that's still Bernanke's favored range, the index already is at the upper end of it — which would imply that Bernanke would want the Fed to continue tightening credit until policymakers were sure inflation was coming down.

Notably, Bernanke has said the Fed should set a definite target for an acceptable level inflation and make it public. Greenspan has opposed the idea, fearing that it would mean less flexibility for the Fed in responding to shifts in the economy.

Inflation targeting would clarify the Fed's mission and make its moves easier to understand, said Charles Plosser, an economist at the University of Rochester in New York.

Moreover, Plosser said, it would make the central bank less subject to the agenda of one person — the Fed chairman — no matter how charismatic or capable.

Bernanke has in general supported the idea of making Fed policy more transparent to the public. Many investors say they favor a more open Fed, as well.

"As a bond trader, I welcome transparency," said Robert Gahagan, senior portfolio manager and director of taxable bond investments at American Century Investments in Mountain View, Calif. "There is nothing worse than being totally surprised" by Fed policy shifts, he said.

But Greenspan already has moved Fed policy much more into the sunlight. It wasn't until after Greenspan took over that the central bank began publicly announcing its interest-rate moves.

The greatest challenge Bernanke may face over time, some analysts say, is steering the Fed in a world in which increasing globalization of the economy and markets has made Fed policy, to a degree, hostage to forces beyond its direct control.

Greenspan and cohorts saw the effects of globalization as long-term U.S. interest rates stayed surprisingly low over the last year, even as the Fed was raising short-term rates. In part, China's aggressive buying of U.S. bonds, as it recycled its trade-surplus dollars, kept the Fed's credit-tightening moves from having their full effect.

Globalization, Harris said, "adds a whole new set of complications to Fed policy."