With Federal Reserve Chairman Ben Bernanke becoming the first in his office ever to hold a press conference, I wonder whether he'll actually say anything. As I mentioned yesterday, and as Krugman has said for years, Very Serious People worry about inflation even though elementary economics shows there isn't anything to worry about.
Fortunately, other reporters are catching on:
One question more than any than other is crying out for an answer: Why has Mr. Bernanke decided to accept widespread unemployment for years on end, even though he believes he has the power to reduce it?
The Fed’s own forecasts suggest that the unemployment rate won’t fall below 5 percent for perhaps another five or six years. Mr. Bernanke believes the Fed “retains considerable power” to reduce unemployment faster, despite the fact that its benchmark interest rate is zero, as he’s said before. Yet he has been hesitant to use that power.
As he has explained many times, the Fed has alternatives. It could announce that it would keep its benchmark rate at zero for a few years, which would probably hold down long-term rates. It could say that it was comfortable with higher inflation for a limited period of time, given how low inflation has been since 2007 and how high unemployment is. Above all, Mr. Bernanke could make clear that he considers years of widespread unemployment to be unacceptable.
He has not done so, and he has yet to offer a satisfying rationale.
So, later today, will he explain?