Former Federal Reserve chair Ben Bernanke said in an interview on Sunday that he thought the Fed could address inflation with a “soft-ish landing,” to avoid a recession.
When asked by CNN’s Fareed Zakaria if he agreed with former Treasury Secretary Larry Summers’s assessment that the Fed could induce a recession to tackle inflation, Bernanke disagreed.
“I think a recession is possible. Economists are very bad at predicting recessions, but I think the Fed has a decent chance, a reasonable chance at achieving what [Jerome] Powell calls a soft-ish landing, either no recession or a very mild recession to bring inflation down” he said, referring to the current Fed chair.
Bernanke was also asked if he thought the current state of the economy was similar to stagflation seen in the 1970s and if it felt like the U.S. was out of economic tools to solve problems.
“Do you feel like we are in a situation like that today?” Zakaria asked.
“No, I don’t,” Bernanke said.
“A very basic difference is that the inflation of the 70s lasted for 13 or 14 years and not six months, so people became very, very used to inflation and a huge inflation psychology developed,” he continued.
“I think it’s a very different situation. Today, we have a Federal Reserve that knows it’s responsible for inflation. It’s going to take the lead. It’s got a lot of credibility. We’ve had low inflation now for 40 years. It’s got political support,” he added.
Bernanke’s remarks come as inflation has soared in the past few months. In May, the annual inflation rate was the fastest yearly growth in prices since inflation reached 8.9 percent annually in December 1981.
“Inflation is hitting not only the volatile food and energy categories, which themselves look to persist at high levels, especially food, but has moved deeply into services and shelter costs, while remaining high in goods categories we thought were cooling off,” Robert Frick, chief corporate economist at Navy Federal Credit Union, said in an analysis last week.
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June 13, 2022 at 03:04AM
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Bernanke sees decent chance for Fed to pull off a ‘soft-ish landing’ - The Hill
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