WASHINGTON (CNNMoney.com) -- President Obama is expected to nominate Ben Bernanke to a second term as head of the Federal Reserve, a senior administration official told CNN Monday night.

The source asked not to be identified because the announcement had not yet been made.

Obama is expected to make the announcement on Tuesday morning at Martha's Vineyard, Mass., where he is vacationing.

Bernanke, a Republican who has played a central role in the government's extraordinary response to the recession and 2008 banking panic, will have to be confirmed by the Senate.

The question of Bernanke's reappointment has been the focus of much speculation. Recently many economists and insiders had said they believed that he would more than likely keep his job.

Bernanke's term ends on Jan. 31. Fed chairmen serve four-year terms.

Earlier this summer, Obama praised the Fed chairman and came to his defense.

The Fed is charged with examining bank soundness, as well as checking the cost and availability of money and credit in the economy. Given the more than $1 trillion the Fed has printed to get the credit markets moving, there's a renewed focus on watching for signs of inflation.

Over the past three decades, the country has had only three Fed chairmen. New presidents have tended to keep Fed chiefs in place regardless of political party to maintain continuity in monetary policy and confidence in the markets.

Paul Volcker was appointed by President Carter in 1979 and retained by President Reagan. Alan Greenspan, a 1987 Reagan appointee, served under four presidents including President Clinton.

Bernanke, 55, was appointed to the top job in 2006 by President George W. Bush, after serving as Bush's chair of the Council of Economic Advisers.

An expert on the Great Depression, Bernanke previously chaired the economics department at Princeton University. He also did a three-year stint on the Fed's board of governors ending in 2005.

The rumors that Bernanke was headed for the chopping block started last November. In a nationally-televised press conference, Obama announced the members of his economic team, touting their experience and accomplishments. But he didn't mention Bernanke's name -- a big omission, some said at the time. But the assumption that Obama would not keep Bernanke had changed in recent months.

In a speech last week at an annual symposium in Jackson Hole, Wyo., Bernanke said that the U.S. economy is about to start growing again, although he cautioned it will be a slow recovery with continued high unemployment in the near term.

He spent much of the speech reviewing the economic crisis that unfolded last September in the wake of the bankruptcy of Lehman Brothers and near collapse of insurer AIG (AIG, Fortune 500).

Bernanke defended the actions of the Fed, Treasury Department and Congress, as well as major governments around the world, in their response to the crisis. He said those actions likely prevented the financial panic from plunging the world into a far more serious economic downturn, possibly even a depression.

Bernanke has bumped heads with some in the Senate in the past several months, and his confirmation hearing could get tense.

Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said in a statement that he supported Bernanke's nomination as the "right choice," but he noted that he has had "serious differences" with the Fed under Bernanke's tenure.

"Chairman Bernanke was too slow to act during the early stages of the foreclosure crisis, but he ultimately demonstrated effective leadership and his reappointment sends the right signal to the markets," Dodd said in a statement.

Dodd said he expected that lawmakers would raise "many serious questions" about the Fed's role and authority.