Ben S Bernanke, former Chairman of the US Federal Reserve, said that the perception that the US does not pay attention to the concerns of emerging markets is not true.

He said the US Federal Reserve Chairman holds 8-10 meetings with central bank governors from across the world every year, including from emerging markets, and always explained policies and listened to other points of view. He was speaking at the second Kotak Presidium, a forum for thought leadership sponsored by Kotak Mahindra Bank.

He was asked about his views in the context of a debate that he had with RBI Governor Raghuram Rajan a week earlier. Noting that he had some differences with Rajan, especially on the spillover effects of the US monetary policy, Bernanke nevertheless, expressed admiration for Rajan as an outstanding economist and central banker.

Bernanke said that he expected a moderate-to-strong growth path for the US economy, given the improved de-leveraging of households, improved credit availability, new house sales moving up, prices moving up, and a supportive fiscal policy. He said that the fundamentals of the US economy are better and this bodes well for emerging markets as well.

When asked by Uday Kotak if the financial crisis was over, Bernanke said the “intense phase of the crisis is behind us. But unemployment is still high”.

Inflation targeting

Asked about his views on inflation-targeting as a single point mandate for central banks, Bernanke said that he had been supportive of this even earlier.

Inflation targeting, he said, was useful because it tells the market what to expect. At the same time, it did not mean that central banks would ignore everything else.

Asked about his legacy, he wished he had helped bring the economy back to normalcy.

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