Bernanke Says QE Works While Posing No Immediate Bubble Risk
“We don’t think that financial stability concerns should at this point detract from the need for monetary policy accommodation which we are continuing to provide,” he said today in Washington at a forum sponsored by the Brookings Institution.
Bernanke said of all the concerns raised about bond buying by the Fed, the risk it could prompt financial instability is “the only one I find personally credible.” Currently, asset prices are broadly in line with historical norms, he said.
Bernanke is seeking to define his legacy before stepping down on Jan. 31. During his eight-year tenure as leader of the Fed he piloted the economy through a financial crisis that led to the longest recession since the 1930s. He has tried to bolster growth by holding the target interest rate near zero and pushing forward with unprecedented bond buying known as QE.
“Those who have been saying for the last five years that we’re just on the brink of hyperinflation, I think I would just point them to this morning’s CPI number and suggest that inflation is not really a significant risk of this policy,” Bernanke said, referring to a Labor Department report showing the consumer price index rose 1.5 percent in the past year. The Fed has set an inflation target of 2 percent.