Former Federal Reserve Chair Ben Bernanke criticized in an interview on May 16 that the Powell-led Federal Reserve has been too slow in addressing the inflation problem in the US. He thought that the Fed’s forward guidance has slowed the authorities’ response to some extent, leading to a hyperinflation problem that has evolved into the worst episode in U.S. financial history since the early 1980s.
However, Bernanke also acknowledged that addressing the precise moment to curb inflation is complicated. Bernanke said he can understand Powell’s Team to take gradualism to deal with soaring inflation, in order to avoid another unpleasant experience of Taper Tantrum back in 2013. At that time, the United States Treasury bond interest rates suddenly soared, triggering violent turmoil in financial markets.
Bernanke warned that the results of the authorities’ slow response will drag down the economy, and that the U.S. economy in the next one or two years will confront a risk of stagflation, meaning an unfortunate situation of high inflation with little economic growth. However, he also believed that the U.S. economy will not head for recession.
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