Former Fed Chair: Central Banks Will Find It Harder to Control Inflation in the Future

March 6th: Former Federal Reserve Chair Bernanke expressed that the recent acceleration of global inflation could make it more difficult for central banks to control prices in the future. Bernanke proposed that central bank governors might be more cautious when allowing prices to surge again. He referred to research indicating that Fed policymakers in the 1970s (a period of economic shock caused by oil prices) were "generally more hawkish than younger people." In his prepared remarks, Bernanke stated that a crucial lesson learned from the recent bout of inflation is that central bank communication should place greater emphasis on the possibility that outcomes may deviate significantly from the most likely forecast and that if reality differs from the forecast, monetary policy will respond appropriately. A more effective communication strategy may involve the Fed stating that its baseline assumption is that inflation is transitory.