Ex-Fed chief Bernanke back as blogger

30 Mar11:40 PM

[WASHINGTON] Former US Federal Reserve chairman Ben Bernanke returned to public debate over economic policy Monday with the launch of his own blog, a year after leaving the Fed.

"Now that I'm a civilian again, I can once more comment on economic and financial issues without my words being put under the microscope by Fed watchers," Mr Bernanke said on the blog, hosted by his new home the Brookings Institution, the Washington think tank.

Mr Bernanke, who led the Fed through the worst economic crisis in the country since the 1930s, launched in to a discussion that dogged him in his last years, the impact of ultra-low interest rates on the income of retirees on interest on their savings.

"When I was chairman, more than one legislator accused me and my colleagues on the Fed's policy-setting Federal Open Market Committee of 'throwing seniors under the bus'" by keeping rates low, he said.

But he argued - as he has for many years - that interest rate policy has to address the strength of the economy, and coming out of the Great Recession of 2008-09 required low rates to support growth.

"Ultimately, the best way to improve the returns attainable by savers was to do what the Fed actually did: keep rates low (closer to the low equilibrium rate), so that the economy could recover and more quickly reach the point of producing healthier investment returns," he argued.

Mr Bernanke stressed that his "opinions are my own and do not necessarily reflect the views of my former colleagues at the Fed."

But the opening post served as a defense of the policies of his close ally and successor as Fed chair, Janet Yellen, who has kept the benchmark federal funds rate at zero, where Mr Bernanke put it at the end of 2008.

The debate over the low rate "sounds very textbook-y, but failure to understand this point has led to some confused critiques of Fed policy," Mr Bernanke said.

AFP