WASHINGTON, Jan 16 (Reuters) - In his last planned public remarks as head of the U.S. central bank, Federal Reserve Chairman Ben Bernanke said he believes the controversial steps he took to pull the economy from its deep slump were effective, with few of the costs that many feared.
During his tenure, Bernanke pushed the Fed far into unconventional territory, not only slashing short-term interest rates to zero and keeping them there since December 2008, but providing long-term “forward guidance” on how long the Fed will keep interest rates low.
And in a second unprecedented move, he quadrupled the Fed’s balance sheet to $4 trillion through three rounds of bond-buying aimed at lowering long-term rates and spurring hiring.
“I do think by the way that they both have been helpful,” Bernanke said at a Brookings Institution event.
The only credible potential cost of quantitative easing, he said, is the risk of financial instability, and at this point, worries about financial instability should not keep the Fed from delivering accommodation that the economy needs, he said.
Other potential costs, like inflation, have not emerged, he said.
Janet Yellen, currently Fed vice chair, will take the reins as Fed chair on Feb. 1, just after the Fed’s first policy-setting meeting of the year.