DALLAS May 19 The Federal Reserve does not need
to shrink its $4 trillion-plus balance sheet by even "a dime"
for it to normalize monetary policy when the time comes, former
Fed Chair Ben Bernanke said on Monday.
"The Fed has worked very carefully to figure out how to
raise rates at the appropriate time," Bernanke told a monetary
policy conference. "That will eventually happen - we hope it
happens because that means the economy is going back to normal."
When the Fed does tighten, he said, "you can have some
bumpiness" as markets potentially react to the changes. But in
all, he said, "it will be a fairly normal process."
The Fed under Bernanke bought trillions of dollars of
long-term securities to help boost the U.S. economy and keep
deflation from taking hold.
As the Fed exits from those extraordinary policies, Bernanke
said, "There is absolutely no need or requirement for the
balance sheet to go back to normal as monetary policy
normalizes. The balance sheet could be kept where it is for a
very long time if necessary."
(Reporting by Ann Saphir; Editing by Chris Reese)