Federal Reserve press conference, 2012-09-13 — Chair Ben Bernanke

Question (Steve Liesman, CNBC): All right, I just need to follow up. Does this—so you’re saying it does not include greater tolerance for inflation, that you will—you would reverse course if inflation were to be above your target level, even given that statement?
Answer: Well, if inflation goes above the target level, as we talked about in our statement in January, we take a balanced approach. We bring inflation back to the target over time, but we do it in a way that takes into account the deviations of both of our objectives, you know, from their targets.

Question (Greg Robb, MarketWatch): Does the negative commentary hurt QE? Could it, if people in the market don’t think it will work?
Answer: There’s going to be negative commentary whether it comes from Fed officials or not. Again, because there’s a range of views—some people think it’s more effective than others. I discussed some of the evidence in my speech in Jackson Hole, and I talked about the fact that, you know, different researchers have gotten different estimates of the impact. Virtually all of them find that there is some beneficial impact, but they disagree on how much. So, there’s going to be disagreement. And again, I personally don’t think that it’s a panacea, I personally don’t think it’s going to solve the problem. But I do think it has enough force to help nudge the economy in the right direction.

Question (Patrick Welter, Frankfurter Allgemeine Zeitung): Mr. Chairman, my name is Patrick Welter with the German newspaper Frankfurter Allgemeine Zeitung. I have two questions, if I may. One is in the projections. In the economic and inflation projections, you foresee a low inflation rate below 2 percent to 2015—not you personally, but the FOMC. I am wondering, if you look at the growth rates, you have growth rates of about 3.4 percentage points in 2014 and 2015. How long do you think that it might work that you have such strong growth and no inflation pressure? And the second question, if I may, is, a lot of economists don’t see too much effect out of the further round of QE3. Aren’t you worried that, in promising that you will do whatever you can, even if it is tiny, small, that you give some kind of carte blanche to the fiscal policy and to the Congress not to do enough on their side of the policy action?
Answer: Well, the—on inflation, we do anticipate at some point what’s normal in a recovery, which is, given that the economy fell very quickly and there’s a lot of unused capacity, there’s a lot of slack in the economy, it would be normal that there would be a period where the economy would grow faster than trend in order to make up some of the slack that was created. So we don’t anticipate the economy is going to be overheating anytime soon. And as long as we pay close attention to inflation expectations as well as the trajectory of the economy, we think inflation will remain close to our 2 percent target. On your second question, certainly, there is a range of views on how effective these tools are. I’ve spent a lot of time, as all of my colleagues have, looking at the evidence, and, of course, the staff here have done a great deal of work on the question. And the bottom line for most of it, most of the research, is that while these tools are not so powerful that they can solve the problem, they are at least able to provide meaningful support to the economy. Our job is to use the tools we have to meet our mandate, which is maximum employment and price stability. So if we have tools that we think can provide some assistance and we’re not meeting our mandate, then I think that our obligation is to do what we can. Of course, we would like to see policies across the board to help address these issues. But, you know, that’s not our province; we are the monetary policy authorities, and our job is to use monetary policy as effectively as we can.