WASHINGTON — Federal Reserve Chairman Ben Bernanke on Wednesday admitted there has been some confusion as the central bank has tried to explain plans to scale back its stimulus policies, but said he thought financial markets were “beginning to understand our message.”
Facing Republican criticism of the Fed’s unprecedented efforts to boost economic growth, Bernanke also told the House Financial Services Committee that the central bank has been focused on helping average Americans.
With stock markets hitting record highs, Bernanke was asked if Wall Street has benefited from Fed policies more than Main Street.
“I don’t think so,” he said.
- Seattle company copes with backlash on $70,000 minimum wage
- Man shot dead in South Seattle while on phone with mom
- Seahawks sign four-year extension with linebacker Bobby Wagner worth a reported $43 million
- Impressions from Day 2 of Seahawks' training camp
- Higher wages a surprising success for Seattle restaurant Ivar's
Most Read Stories
“We’re very focused on Main Street. We’re trying to create jobs. We’re trying to make housing affordable,” Bernanke said. “Our goals are Main Street.”
Bernanke’s comments came as he reiterated Wednesday that he expected the central bank to start tapering its bond-buying stimulus program this year. But, he emphasized, the Fed was not on a “preset course.”
The Fed plans to begin reducing the $85 billion in monthly purchases “in measured steps,” he said, but that still could change if the economic recovery does not continue to improve as the central bank projects.
Committee Chairman Jeb Hensarling, R-Texas,
criticized the Fed’s efforts to explain how it would end its stimulus programs.
“Recent panicked responses by financial markets to monetary policy communications and observations from a range of economists suggest the Federal Reserve’s forward guidance clearly needs some improvement,” he said.
“As recent events demonstrate, it remains very much an open question whether the Fed can orchestrate an orderly withdrawal of monetary stimulus,” Hensarling said.
Bernanke said the situation was difficult but that not trying to signal the Fed’s plans risked financial markets moving in the wrong direction, what he called “market dislocation.”
And he admitted that having numerous Fed officials expressing their views could cause some confusion.
“There’s a lot of different views, and I think there’s a benefit to having a lot of different views. People can hear the debate,” he said.
“On the other hand, if people are looking for a single signal, it can be a little confusing.”
Bernanke said he thought the Fed was “doing a reasonable job of communicating our intentions and our plans in the context of a complex monetary policy strategy.”
“I think it’s been very important that we communicate as best we can what our plans and our thinking is,” he said. “I think the markets are beginning to understand our message and that the volatility has obviously moderated.”
Republicans and Democrats noted that Wednesday’s hearing could be Bernanke’s last appearance before the committee as Fed chairman. His second four-year term ends in January, and he’s not expected to seek a third term.
Members of both parties thanked him for his service.
“You have been a creative, innovative leader,” said Rep. Carolyn Maloney, D-N.Y. “You have never been boring.”
While also praising his public service, some Republicans criticized Bernanke for the Fed’s unprecedented stimulus policies, which have dramatically increased the central bank’s balance sheet.