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

ChainCatcher news, former Federal Reserve Chairman Bernanke stated that the recent acceleration of inflation experienced by the world may make it more difficult for central banks to control prices in the future. Bernanke hinted that central bank leaders may be more cautious about allowing prices to soar again. He cited research indicating that Federal Reserve policymakers in the 1970s (a period when the economy was impacted by oil price shocks) were "generally more hawkish than younger individuals."

In his prepared remarks, Bernanke noted that a key lesson from the recent round of inflation is that central bank communication should place greater emphasis on the possibility that outcomes may differ significantly from the most likely forecasts, and that if reality diverges from predictions, monetary policy will respond appropriately.

A better communication strategy might be for the Federal Reserve to state that its baseline forecast envisions temporary inflation.