Former Fed Chairman Ben Bernanke said on Monday that he thinks the Fed will be successful in containing inflation.
I don't want to give you really sharp forecasts, but I do think the Fed will bring inflation down over the next couple of years, Bernanke said during a discussion at the Brookings Institution.
The Fed will be helped by contained inflation expectations, which means that the public doesn't believe that the high inflation over the past year will continue indefinitely. The Powell Fed seems to have the support of the Biden White House and both parties in Congress, he said. The Fed Chairman Jerome Powell has worked hard to improve relations with Congress, and lawmakers seem to support the Fed's inflation-fighting plans, Bernanke said. That wasn't the case in the late 1970s when Congress was pushing for pro-employment policies despite the high inflation. Former Fed chair Arthur Burns did not think that the Fed was an effective tool in fighting inflation, according to Bernanke, who said that it was a big difference from the high inflation era. Today s Fed has 30 years of low inflation, political support and a leadership willing to say the Fed must take the lead in reducing inflation, Bernanke said. The yield of the 10 year Treasury note TMUBMUSD 10 Y has fallen below 3% in recent days due to concerns about a global recession.