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Bernanke tackles price stability, jobs

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Kai Ryssdal: You know, it is not hard for Ben Bernanke to find the limelight. All he has to do is talk, really, and people pay attention. Such was the case today. The Fed Chairman gave a lunchtime talk at the Economic Club of New York. Took some questions afterward as well in which he gave some clues as to our economic future. Marketplace’s Jeremy Hobson reports now from New York.

JEREMY HOBSON: The Fed has two mandates. One is price stability, basically keeping inflation in check. The other is maximum employment. On that issue, Chairman Bernanke said even with a recovery, it’ll be a tough road ahead.

CHAIRMAN BEN BERNANKE: A number of factors suggest that employment gains may be modest during the early stages of the expansion.

On the issue of price stability, Bernanke said he’s still not too worried about inflation. Former Fed Economist Ann Owen, now a professor at Hamilton College, says the chairman’s words are part of the Fed’s strategy to deal with inflation.

ANN OWEN: So if Bernanke can convince us that the Fed is going to keep inflation in check, that’s actually a big part of the job of actually keeping inflation in check by keep inflation expectations very moderate.

DAN COOK: Yeah, I think one of his major roles throughout this whole crisis has been his composure, and reassuring.

That’s Dan Cook, senior market analyst at IG Markets in Chicago. He says the most surprising thing about Bernanke’s speech was that he specifically acknowledged the weakening dollar. Currency traders reacted immediately, sending the dollar higher against foreign currencies. In a brief Q&A, Bernanke left the comfort of his dual mandate and talked about a problem that hasn’t gone away. Institutions that are still too big to fail.

CHAIRMAN BERNANKE: We need to have some alternative to bankruptcy or bailout. We need to have another way to close firms that have come to the brink of failure without destroying the rest of the system.

That, of course, is something the powerful Fed chairman doesn’t have the power to do, at least not yet.

In New York, I’m Jeremy Hobson for Marketplace.

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