WASHINGTON - Ben Bernanke offered a broad defense today of the Federal Reserve's policies under his leadership a little over two months before his eight-year tenure ends.
Bernanke said the Great Recession made it essential for the Fed to become more publicly transparent so it could explain why record-low interest rates were needed to support the economy.
The recession meant that the Fed's communications had to evolve in ways he didn't envision when he became chairman in 2006, Bernanke said. Still, he became leader with a long-held view that a less secretive Fed was in the public's interest.
"I believed then, as I do today, that transparency in monetary policy enhances public understanding and confidence," Bernanke said in his remarks at the annual dinner of the National Economists Club.
Some critics have argued that the Fed's efforts to provide more information to the public have sometimes confused more than clarified the central bank's intentions.
In his comments, Bernanke endorsed remarks Janet Yellen made last week at a Senate hearing on her nomination to succeed him. Yellen, now vice chair, said the surest path to normal rate policies will be for the Fed to keep doing all it can to promote a robust recovery.
Bernanke's remarks today and Yellen's last week suggest that the Fed has no plans to scale back its $85-billion-a-month in bond purchases when it next meets Dec. 17-18. The bond purchases are intended to keep long-term borrowing rates low to spur spending and economic growth.
"The economy has made significant progress since the depths of the recession," Bernanke said. "However, we are still far from where we would like to be, and, consequently, it may be some time before monetary policy returns to more normal settings."
Bernanke's remarks had something of the tone of a valedictory address. He reviewed, and broadly defended, the many unorthodox decisions the Fed made under his guidance as it confronted the worst financial crisis and recession since the 1930s.
"We have had to contend with the persistent effects of the seizing-up of the financial system, the collapse of housing prices and construction, new financial shocks in Europe and elsewhere, restrictive fiscal policies at all levels of government, and, of course, the enormous blows to output and employment associated with the worst U.S. recession since the Great Depression," Bernanke said.