Financial Stability News

Flashing news about financial stability and central banking

Bernanke on the dual mandate

Chairman Bernanke was responding to questions in the Senate Banking Committee today. Most of the Q&A were on fiscal matters, especially on the need for budget consolidating in the medium term, including the big three entitlement programs Medicaid, Medicare, and Social Security.

Federal Reserve Chairman Ben Bernanke urged senators to resolve differences over payroll tax cuts that expire this month saying uncertainty could slow the economy down. He testified before the Senate Budget Committee on the U.S. economic outlook for this year. Chairman Bernanke told the committee that the labor market still has a “long way to go” and unemployment levels remain “troubling.”

At around 1:27 Bernanke gives some interesting reflections on the dual mandate and the ongoing policy of quantitative easing.

At around 1:40 he gives a strong defense for the ZIRP policy and oppose the recent views from Charles Swab in WSJ and Bill Gross of PIMCO in FT

Throughout, many senators commended Bernanke on his new policy of increased transparency, including the posting of an inflation target.

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