Federal Reserve Chairman Ben S. Bernanke rebuffed a lawmaker’s effort to label him as a monetary policy “dove” who favors promoting full employment over ensuring price stability.
“I don’t think there’s any question that you would be the biggest dove, if you will, since World War II,” Republican Senator Bob Corker of Tennessee said to Bernanke today during the Fed chairman’s semi-annual testimony to the Senate Banking Committee. “I think it’s something you’re rather proud of.”
“You called me a dove,” Bernanke replied. “Well maybe in some respects I am, but on the other hand my inflation record is the best of any Federal Reserve chairman in the postwar period - - at least one of the best, about 2 percent average inflation.”
Under Bernanke the Federal Open Market Committee has sought to spur economic growth and reduce unemployment by holding the benchmark interest rate at close to zero since December 2008. Unemployment last month was 7.9 percent. The committee has also pushed the Fed’s balance sheet to a record $3.1 trillion through bond purchases aimed partly at averting deflation.
The Fed’s preferred gauge of inflation, the personal consumption expenditures price index, matched a three-year low of 1.3 percent in December compared with a year earlier.
The inflation index has averaged 2.1 percent since Bernanke took office in January 2006, according to Commerce Department data compiled by Bloomberg. That’s below the 3.8 percent average level from the January 1960 start of monthly data until Bernanke became chairman, the data show.
Inflation averaged 2.6 percent under Chairman Alan Greenspan, who led the central bank from 1987 to 2006. His predecessor Paul Volcker’s signature accomplishment was taming inflation rates that averaged 5.6 percent during his tenure starting in 1979 before falling to 4 percent when he left in August 1987.
Inflation over the medium term will stay below the Fed’s 2 percent target, Bernanke said today, adding that he believes the central bank’s record stimulus has curtailed the risk of deflation.
The Fed has tried “to achieve a stronger economy for everybody” by seeking to meet its congressional mandate to keep inflation low while attempting to achieve maximum employment, Bernanke said.
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