Quotes from Chairman Bernanke

A collection of quotes from speeches and testimony by Fed Chairman Ben Bernanke. Click on the link in each quote to read the entire speech on the Board of Governors website.

2010

On the economic outlook and monetary policy
"The pace of recovery in output and employment has slowed somewhat in recent months, in part because of slower-than-expected growth in consumer spending, as well as continued weakness in residential and nonresidential construction. Despite this recent slowing, however, it is reasonable to expect some pickup in growth in 2011 and in subsequent years."
—August 27, 2010
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On challenges for the economy and state governments
"Many states and localities continue to face difficulties in maintaining essential services and have significantly cut their programs and work forces. These cuts have imposed hardships in local jurisdictions around the country and are also part of the reason for the sluggishness of the national recovery."
—August 2, 2010
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Semiannual monetary policy report to Congress
"Even as the Federal Reserve continues prudent planning for the ultimate withdrawal of extraordinary monetary policy accommodation, we also recognize that the economic outlook remains unusually uncertain. We will continue to carefully assess ongoing financial and economic developments, and we remain prepared to take further policy actions as needed to foster a return to full utilization of our nation's productive potential in a context of price stability."
—July 21, 2010
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On economic and financial conditions and the federal budget
"As the economy and financial markets continue to recover, and as the actions taken to provide economic stimulus and promote financial stability are phased out, the budget deficit should narrow over the next few years. Even after economic and financial conditions have returned to normal, however, in the absence of further policy actions, the federal budget appears to be on an unsustainable path."
—June 9, 2010
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On on small business lending
"Our collective challenge is to help ensure that creditworthy borrowers have access to credit so that, should they choose, they can expand their businesses or increase payrolls, helping our economy to recovery."
—June 3, 2010
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On on central bank independence, transparency, and accountability
"In undertaking financial reforms, it is important that we maintain and protect the aspects of central banking that proved to be strengths during the crisis and that will remain essential to the future stability and prosperity of the global economy."
—May 26, 2010
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On the Supervisory Capital Assessment Program one year later
"Achieving long-term fiscal sustainability will be difficult, but the costs of failing to do so could be very high. Increasing levels of government debt relative to the size of the economy can lead to higher interest rates, which inhibit capital formation and productivity growth—and might even put the current economic recovery at risk."
—May 6, 2010
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On achieving fiscal sustainability
"Achieving long-term fiscal sustainability will be difficult, but the costs of failing to do so could be very high. Increasing levels of government debt relative to the size of the economy can lead to higher interest rates, which inhibit capital formation and productivity growth—and might even put the current economic recovery at risk."
—April 27, 2010
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On the economic outlook
"Further economic expansion will depend on continued growth in private final demand. On balance, the incoming data suggest that growth in private final demand will be sufficient to promote a moderate economic recovery in coming quarters."
—April 14, 2010
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On economic challenges: past, present, and future
"My best guess is that economic growth, supported by the Federal Reserve's stimulative monetary policy, will be sufficient to slowly reduce the unemployment rate over the coming year. If economic conditions improve, as I expect, we should see increased optimism among consumers and greater willingness on the part of banks to lend, which in turn should aid the recovery."
—April 7, 2010
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On preserving a central role for community banking
"I know that community banks, with their special strengths, can flourish in a system that provides fair competition; indeed, many of you have stepped up during a difficult time to provide credit to support the economic recovery. To create a more competitive system, as well as a safer one, we need to end the too-big-to-fail problem once and for all."
—March 20, 2010
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On the Federal Reserve's role in bank supervision
"The insights provided by our role in supervising a range of banks, including community banks, significantly increases our effectiveness in making monetary policy and fostering financial stability."
—March 17, 2010
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Semiannual Monetary Policy Report to the Congress
"The Federal Reserve’s ability to identify and address diverse and hard-to-predict threats to financial stability depends critically on the information, expertise, and powers that it has by virtue of being both a bank supervisor and a central bank."
—February 24, 2010
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On the Federal Reserve's exit strategy
"The sequencing of steps and the combination of tools that the Federal Reserve uses as it exits from its currently very accommodative policy stance will depend on economic and financial developments. One possible sequence would involve the Federal Reserve continuing to test its tools for draining reserves on a limited basis.... As the time for the removal of policy accommodation draws near, those operations could be scaled up to drain more significant volumes of reserve balances to provide tighter control over short-term interest rates. The actual firming of policy would then be implemented through an increase in the interest rate paid on reserves."
—February 10, 2010
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On monetary policy and the housing bubble
"Stronger regulation and supervision aimed at problems with underwriting practices and lenders' risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates."
—January 3, 2010
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2009

Frequently asked questions
"Though we have begun to see some improvement in economic activity, we still have some way to go before we can be assured that the recovery will be self-sustaining. Also at issue is whether the recovery will be strong enough to create the large number of jobs that will be needed to materially bring down the unemployment rate. Economic forecasts are subject to great uncertainty, but my best guess at this point is that we will continue to see modest economic growth next year—sufficient to bring down the unemployment rate, but at a pace slower than we would like."
—December 7, 2009
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On the outlook for the economy and policy
"My own view is that the recent pickup reflects more than purely temporary factors and that continued growth next year is likely. However, some important headwinds—in particular, constrained bank lending and a weak job market—likely will prevent the expansion from being as robust as we would hope."
—November 16, 2009
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On financial regulation and supervision after the crisis
"Although regulators can do a great deal on their own to improve financial regulation and oversight, the Congress also must act. We have seen numerous instances when weaknesses and gaps in the regulatory structure itself contributed to the crisis."
—October 23, 2009
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On Asia and the global financial crisis
"Early this year, with many of the Asian economies in freefall, a quick recovery seemed difficult to imagine, but recent data from the region suggest that a strong rebound is, in fact, under way. Although the regional economy continued to contract in the first months of 2009, it expanded at an impressive 9 percent annual rate in the second quarter.... At this point, while risks to the economic outlook certainly remain, Asia appears to be leading the global recovery."
—October 19, 2009
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On the Federal Reserve's balance sheet
"Overall, the Federal Reserve has a wide range of tools for tightening monetary policy when the economic outlook requires us to do so. We will calibrate the timing and pace of any future tightening, together with the mix of tools, to best foster our dual objectives of maximum employment and price stability."
—October 8, 2009
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On regulatory reform
"For purposes of both effectiveness and accountability, the consolidated supervision of an individual firm... is best vested with a single agency. However, the broader task of monitoring and addressing systemic risks...may exceed the capacity of any individual supervisor. Instead, we should seek to marshal the collective expertise and information of all financial supervisors to identify and respond to developments that threaten the stability of the system as a whole."
—October 10, 2009
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On his renomination to serve another term as Fed chairman
"The Federal Reserve, like other economic policymakers, has been challenged by the unprecedented events of the past few years. We have been bold or deliberate as circumstances demanded, but our objective remains constant: to restore a more stable economic and financial environment in which opportunity can again flourish, and in which Americans' hard work and creativity can receive their proper rewards."
—August 25, 2009
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Reflections on a year of crisis
"After contracting sharply over the past year, economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good."
—August 21, 2009
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Semiannual Monetary Policy Report to the Congress
"In light of the substantial economic slack and limited inflation pressures, monetary policy remains focused on fostering economic recovery. Accordingly... the FOMC believes that a highly accommodative stance of monetary policy will be appropriate for an extended period."
—June 21, 2009
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On Community Development Financial Institutions: Challenges and Opportunities
"Community stabilization work is important for the overall economic recovery. Healthy and vibrant neighborhoods are a source of economic growth and social stability. Community Development Financial Institutions and other community groups are already responding to the evident needs, but they will require many willing partners to ensure success in the long run."
—June 17, 2009
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On the current economic and financial conditions and the federal budget
"Prompt attention to questions of fiscal sustainability is particularly critical because of the coming budgetary and economic challenges associated with the retirement of the baby-boom generation and continued increases in medical costs.... With the ratio of debt to GDP already elevated, we will not be able to continue borrowing indefinitely to meet these demands."
—June 3, 2009
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On the Supervisory Capital Assessment Program
"A principal goal of the capital assessment process is to help increase confidence in the banking system. In particular, if it helps reduce uncertainty among investors regarding future losses and capital needs...one of the key objectives of the program will have been achieved. It will be some time before we can evaluate the success of the program on this criterion. However, the initial indications are encouraging."
—May 11, 2009
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On the lessons of the financial crisis for banking supervision
"I believe a more macroprudential approach to supervision—one that supplements the supervision of individual institutions to address risks to the financial system as a whole—could help to enhance overall financial stability."
—May 7, 2009
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On the economic outlook
"We are likely to see further sizable job losses and increased unemployment in coming months. However, the recent data also suggest that the pace of contraction may be slowing, and they include some tentative signs that final demand, especially demand by households, may be stabilizing."
—May 5, 2009
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On financial innovation and consumer protection
"The challenge faced by regulators is to strike the right balance: to strive for the highest standards of consumer protection without eliminating the beneficial effects of responsible innovation on consumer choice and access to credit."
—April 17, 2009
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On the financial crisis
"Recently we have seen tentative signs that the sharp decline in economic activity may be slowing, for example, in data on home sales, homebuilding, and consumer spending, including sales of new motor vehicles."
—April 14, 2009
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On the Federal Reserve's balance sheet
"In pursuing our strategy, which I have called 'credit easing,' we have also taken care to design our programs so that they can be unwound as markets and the economy revive. In particular, these activities must not constrain the exercise of monetary policy as needed to meet our congressional mandate to foster maximum sustainable employment and stable prices."
—April 3, 2009
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On AIG
"Many of you have raised specific issues with regard to the payout of retention bonuses to employees at AIG-FP.... I asked that...payments be stopped but was informed that they were mandated by contracts agreed to before the government's intervention. I then asked that suit be filed to prevent the payments. Legal staff counseled against this action, on the grounds that Connecticut law provides for substantial punitive damages if the suit would fail."
—March 24, 2009
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On the financial crisis and community banking
"The problem of too-big-to-fail is extremely serious. To address this issue, which should be a top priority for financial reform, policymakers will need to act on several fronts."
—March 20, 2009
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On financial reform to address systemic risk
"It is not too soon for policymakers to begin thinking about the reforms to the financial architecture, broadly conceived, that could help prevent a similar crisis from developing in the future. We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components."
—March 10, 2009
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On current economic and financial conditions and the federal budget
"Policymakers must remain prepared to take the actions necessary in the near term to restore stability to the financial system and to put the economy on a sustainable path to recovery. But the near-term imperative of achieving economic recovery and the longer-run desire to achieve programmatic objectives should not be allowed to hinder timely consideration of the steps needed to address fiscal imbalances."
—March 3, 2009
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Semiannual monetary policy report to the Congress
"If actions taken by the Administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability—and only if that is the case, in my view—there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery."
—February 24, 2009
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On Federal Reserve policies to ease credit and their implications for the Fed's balance sheet
"We provide a great deal of information about our lending programs and our balance sheet to the Congress and the public. But... we will do more on this front, both expanding the information we provide and improving how we communicate that information. Increased transparency is the best way to demonstrate that the Federal Reserve's nontraditional policies are well conceived, well managed, and produce substantial public benefit."
—February 18, 2009
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On Federal Reserve programs to strengthen credit markets and the economy
"Our lending to financial institutions, together with actions taken by other agencies, has helped to relax the severe liquidity strains experienced by many firms and has been associated with considerable improvements in interbank lending markets."
—February 10, 2009
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On the crisis and the policy response
"The incoming Administration and the Congress are currently discussing a substantial fiscal package that, if enacted, could provide a significant boost to economic activity. In my view, however, fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system."
—January 13, 2009
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2008

On housing, mortgage markets and foreclosures
"Despite good-faith efforts by both the private and public sectors, the foreclosure rate remains too high, with adverse consequences for both those directly involved and for the broader economy.  More needs to be done."
—December 4, 2008
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On Federal Reserve policies in the financial crisis
"Although conventional interest rate policy is constrained by the fact that nominal interest rates cannot fall below zero, the second arrow in the Federal Reserve's quiver—the provision of liquidity—remains effective. "
—December 1, 2008
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On the troubled Asset Relief Program and the Federal Reserve's liquidity facilities
"It is imperative that all banking organizations and their regulators work together to ensure that the needs of creditworthy borrowers are met in a manner consistent with safety and soundness. "
—November 18, 2008
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On policy coordination among central banks
"The 10th anniversary of the euro is an opportunity not only to celebrate an impressive and historic achievement, but also to reaffirm our commitment to cooperation as we address the challenges of an increasingly integrated global economy. Central bankers and other policymakers around the world must continue to work together to address disruptions in credit markets and to promote a vibrant global economy. "
—November 14, 2008
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On the future of mortgage finance in the United States
"We must strive to design a housing financing system that ensures the successful funding and securitization of mortgages during times of financial stress but that does not create institutions that pose systemic risks to our financial markets and the economy. Government likely has a role to play in supporting mortgage securitization, at least during periods of high financial stress."
—October 31, 2008
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On current conomic outlook and financial markets
"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate."
—October 20, 2008
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Remarks at the President’s Working Group Market Stability Initiative Announcement
"As Americans well know, the challenges evident in the financial markets and in the economy are large and complex, but I believe that the steps taken today will help us to overcome them."
—October 14, 2008
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On current economic and finanacial conditions
"I believe that the bold actions taken by the Congress, the Treasury, the Federal Reserve, and other agencies, together with the natural recuperative powers of the financial markets, will lay the groundwork for financial and economic recovery."
—October 7, 2008
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On the economic outlook
"The intensification of financial stress in recent weeks, which will make lenders still more cautious about extending credit to households and business, could prove a significant further drag on growth. The downside risks to the outlook thus remain a significant concern."
—September 24, 2008
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On U.S. financial markets
"Despite the efforts of the Federal Reserve, the Treasury, and other agencies, global financial markets remain under extraordinary stress. Action by the Congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy."
—September 23, 2008
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On historically black colleges and universities
"We must find ways to move more of our students, especially minorities and those from disadvantaged backgrounds, into education after high school. The historically black colleges and universities have long played a vital role in this regard."
—September 9, 2008
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On reducing systemic risk
"The recent decline in commodity prices, as well as the increased stability of the dollar, has been encouraging. If not reversed, these developments, together with a pace of growth that is likely to fall short of potential for a time, should lead inflation to moderate later this year and next year. Nevertheless, the inflation outlook remains highly uncertain."
—August 22, 2008
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Monetary Policy Report to Congress
"The economy continues to face numerous difficulties, including ongoing strains in financial markets, declining house prices, a softening labor market, and rising prices of oil, food, and some other commodities."
—July 15, 2008
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On regulatory restructuring
"The financial turmoil that began last summer has impeded the ability of the financial system to perform its normal functions and adversely affected the broader economy. This experience indicates a clear need for careful attention to financial regulation and financial stability by the Congress and other policymakers."
—July 10, 2008
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On fianancial regulation and financial stability
"The Federal Reserve is strongly committed to supporting the stability and improved functioning of the financial system. We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end, should the current unusual and exigent circumstances continue to prevail in dealer funding markets."
—July 8, 2008
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On challenges for health-care reform
"At some point, health-care spending as a share of GDP will stop rising, but it is difficult to guess when that will be, and there is little sign of it yet."
—June 16, 2008
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On outstanding issues in the analysis of inflation
"The latest round of increases in energy prices has added to the upside risks to inflation and inflation expectations. The Federal Open Market Committee will strongly resist an erosion of longer-term inflation expectations, as an unanchoring of those expectations would be destabilizing for growth as well as for inflation."
—June 9, 2008
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On the economic challenges: 1975 and now
"We see little indication today of the beginnings of a 1970s-style wage-price spiral, in which wages and prices chased each other ever upward."
—June 4, 2008
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On the economic outlook
"Broadly speaking, the functioning of financial markets has improved of late, but conditions remain strained and some key funding and securitization markets have shown only tentative signs of recovery."
—June 3, 2008
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On risk management in financial institutions
"Even the most carefully crafted regulations cannot ensure that liquidity crises will not happen again. But, if moral hazard is effectively mitigated, and if financial institutions and investors draw appropriate lessons from the recent experience about the need for strong liquidity risk management practices, the frequency and severity of future crises should be significantly reduced."
—May 15, 2008
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On liquidity provision by the Federal Reserve
"Even the most carefully crafted regulations cannot ensure that liquidity crises will not happen again. But, if moral hazard is effectively mitigated, and if financial institutions and investors draw appropriate lessons from the recent experience about the need for strong liquidity risk management practices, the frequency and severity of future crises should be significantly reduced."
—May 13, 2008
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On addressing weaknesses in the global financial markets
"We do not have the luxury of waiting for markets to stabilize before we think about the future. Indeed, many of the necessary changes that have been identified, including increasing transparency, improving risk management, and attaining better coordination among regulators, could provide important support to the process of normalizing our financial markets."
—April 10, 2008
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On the importance of financial education and the National Jump$tart Coalition survey
"In light of the problems that have arisen in the subprime mortgage market, we are reminded of how critically important it is for individuals to become financially literate at an early age so that they are better prepared to make decisions and navigate an increasingly complex financial marketplace."
—April 9, 2008
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Testimony on the economic outlook
"It now appears likely that real gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly."
—April 2, 2008
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On reducing preventable mortgage foreclosuress
"Reducing the rate of preventable foreclosures would promote economic stability for households, neighborhoods, and the nation as a whole.  Although lenders and servicers have scaled up their efforts and adopted a wider variety of loss-mitigation techniques, more can, and should, be done."
—March 4, 2008
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Semiannual Monetary Policy Report to Congress
"A critical task for the Federal Reserve over the course of this year will be to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives of maximum employment and price stability in an environment of downside risks to growth, stressed financial conditions, and inflation pressures. In particular, the FOMC will need to judge whether the policy actions taken thus far are having their intended effects."
—February 27, 2008
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Testimony on the economy and financial markets
"At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt."
—February 14, 2008
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Testimony on the economic outlook
"To be useful, a fiscal stimulus package should be implemented quickly and structured so that its effects on aggregate spending are felt as much as possible within the next twelve months or so. Stimulus that comes too late will not help support economic activity in the near term, and it could be actively destabilizing if it comes at a time when growth is already improving."
—January 17, 2008
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On financial markets, the economic outlook and monetary policy
"In light of recent changes in the outlook for and the risks to growth, additional policy easing may well be necessary. The [FOMC] will, of course, be carefully evaluating incoming information bearing on the economic outlook. Based on that evaluation, and consistent with our dual mandate, we stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks."
—January 10, 2008
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2007

National and regional economic overview
"Economic forecasting is always difficult, but the current stresses in financial markets make the uncertainty surrounding the outlook even greater than usual. We at the Federal Reserve will have to remain exceptionally alert and flexible as we continue to assess how best to promote sustainable economic growth and price stability in the United States."
—November 30, 2007
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On Federal Reserve communications
"The FOMC has engaged in extensive deliberations over the past year or so to consider further steps toward greater transparency.... As indicated in a statement issued by the FOMC today , these discussions have led to a decision to increase the frequency and expand the content of the publicly released economic projections that are made by Federal Reserve Board members and Reserve Bank presidents."
—November 14, 2007
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On the economic situation and outlook
"We are on schedule to propose rules by the end of this year to address unfair or deceptive mortgage lending practices. These rules would apply to subprime loans offered by any mortgage lender. We are looking closely at practices such as prepayment penalties, failure to escrow for taxes and insurance, stated-income and low-documentation lending, and failure to give adequate consideration to a borrower's ability to repay."
—November 8, 2007
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On microfinance in the United States
"The microfinance movement has grown and adapted considerably during its short history in the United States. I hope that microfinance organizations will sustain their energetic spirit of innovation and experimentation as they strive to become more self-sufficient and adapt to our ever-changing economy."
—November 6, 2007
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On monitary policy under uncertainty
"The fact that the public is uncertain about and must learn about the economy and policy provides a reason for the central bank to strive for predictability and transparency, avoid overreacting to current economic information, and recognize the challenges of making real-time assessments of the sustainable level of real economic activity and employment."
—October 19, 2007
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On the recent financial turmoil and its economic and policy consequences
"It is not the responsibility of the Federal Reserve—nor would it be appropriate—to protect lenders and investors from the consequences of their financial decisions. But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy."
—October 15, 2007
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On John Taylor
"John Taylor's influence on monetary theory and policy has been profound indeed. That influence has been manifest in undergraduate lecture halls and graduate seminar rooms, in the best research journals, and in the highest ranks of government. His ability to crystallize important analytical insights and apply them to policy issues is unsurpassed."
—October 12, 2007
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On education and economic competitiveness
"Education fundamentally supports advances in productivity, upon which our ability to generate continuing improvement in our standard of living depends. If we are to successfully navigate such challenges as the retirement of the baby-boom generation, advancing technology, and increasing globalization, we must work diligently to maintain the quality of our educational system where it is strong and strive to improve it where it is not."
—September 24, 2007
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On subprime mortgage lending and mitigating foreclosures
The perception, however inaccurate, that the GSEs [government-sponsored enterprises] are fully government-backed implies that investors have few incentives... to constrain GSE risk-taking.  Raising the conforming-loan limit would expand this implied guarantee to another portion of the mortgage market, reducing market discipline further. 
—September 20, 2007
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On global imbalance
The U.S. federal budget deficit has declined recently and is officially projected to improve further over the next few years. Unfortunately... the United States has already reached the leading edge of major demographic changes that will result in an older population and a more slowly growing workforce. A major effort to increase public and private saving is needed to prepare for the economic consequences of this demographic transition and to address external imbalances. As the global perspective makes clear, the reduction of the U.S. current account deficit also requires efforts on the part of the surplus countries to reduce the excess of their desired saving over desired investment.
—September 11, 2007
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On housing, housing finance and monetary policy
"The Federal Reserve stands ready to take additional actions as needed to provide liquidity and promote the orderly functioning of markets. It is not the responsibility of the Federal Reserve—nor would it be appropriate—to protect lenders and investors from the consequences of their financial decisions. But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy. "
—August 31, 2007
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Semiannual monetary policy report to Congress
"Overall, the U.S. economy appears likely to expand at a moderate pace over the second half of 2007, with growth then strengthening a bit in 2008 to a rate close to the economy’s underlying trend."
—July 18, 2007
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On inflation expectations and inflation forecasting
"Our ability to forecast inflation and predict how inflation will respond to policy actions depends very much on our capacity to measure and to understand what determines the public's expectations of inflation."
—July 10, 2007
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On the financial accelerator and the credit channel
"Like banks, nonbank lenders have to raise funds in order to lend, and the cost at which they raise those funds will depend on their financial condition—their net worth, their leverage, and their liquidity, for example.  Thus, nonbank lenders also face an external finance premium that presumably can be influenced by economic developments or monetary policy."
—June 15, 2007
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On the housing market and subprime lending
"We will follow developments in the subprime market closely.  However, fundamental factors—including solid growth in incomes and relatively low mortgage rates—should ultimately support the demand for housing, and at this point, the troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system."
—June 5, 2007
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On recognizing leadership
"As an economist, I am persuaded that a strong educational system—one that promotes lifetime learning and skill development—is a critical factor in our nation's prosperity. The economic importance of education will only increase as technology advances and as the global economy becomes increasingly integrated and complex."
—May 22, 2007
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On the subprime mortgage market
"We at the Federal Reserve will do all that we can to prevent fraud and abusive lending and to ensure that lenders employ sound underwriting practices and make effective disclosures to consumers. At the same time, we must be careful not to inadvertently suppress responsible lending or eliminate refinancing opportunities for subprime borrowers."
—May 17, 2007
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On regulation and financial innovation
"The goal of regulation should be to preserve [economic] benefits while achieving important public policy objectives, including financial stability, investor protection, and market integrity. Although financial innovation promotes those objectives in some ways, for example by allowing better sharing of risks, certain aspects of financial innovation...may pose significant risks. These risks should not be taken lightly."
—May 15, 2007
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On embracing the challenge of free trade
"Although expansion of trade makes the U.S. economy stronger...the broad benefits of trade and the associated economic change may come at a cost to some individuals, firms, and communities. We need to continue to find ways to minimize the pain of dislocation without standing in the way of economic growth and change."
—May 1, 2007
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On financial literacy
"Helping young people become financially literate is critical for their future economic well-being and should be a high priority for educators."
—April 25, 2007
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On financial regulation and th Invisible Hand
"Regulation that relies on the invisible hand of market-based incentives can complement direct government regulation. For market-based regulation to work, the incentives of investors and other private actors must align with the objectives of the government regulator."
—April 11, 2007
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On the CRA: its evolution and new challenges
"It appears that, at least in some instances, the CRA has served as a catalyst, inducing banks to enter underserved markets that they might otherwise have ignored. At its most successful, the CRA may have had a multiplier effect, supplementing its direct impact by stimulating new market-based, profit-driven economic activity in lower-income neighborhoods."
—March 30, 2007
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On the economic outlook
"Even if the demand for housing falls no further, weakness in residential construction is likely to remain a drag on economic growth for a time as homebuilders try to reduce their inventories of unsold homes to more normal levels."
—March 28, 2007
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On GSE portfolios, systemic risk and affordable housing
"Legislation to strengthen the regulation and supervision of [government-sponsored enterprises] is highly desirable, both to ensure that these companies pose fewer risks to the financial system and to direct them toward activities that provide important social benefits. ...The Federal Reserve Board believes that the GSEs' investment portfolios should be firmly anchored to a measurable public purpose, such as the promotion of affordable housing."
—March 6, 2007
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On globalization and monetary policy
"The Federal Reserve System is quite interested in the implications of globalization for the conduct and effectiveness of monetary policy....The Federal Reserve Bank of Dallas has created a Globalization and Monetary Policy Institute, which will support the study of globalization’s effects on policy and the economy."
—March 2, 2007
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On long-term fiscal challenges and the economy
"Dealing with the resulting fiscal strains will pose difficult choices for the Congress, the Administration, and the American people. However, if early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost."
—February 28, 2007
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Semiannual monetary policy report to Congress
"The projections of the members of the Board of Governors and the presidents of the Federal Reserve Banks are for inflation to continue to ebb over this year and next.... But...the FOMC has continued to view the risk that inflation will not moderate as expected as the predominant policy concern."
—February 14, 2007
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On the level and distribution of economic well-being
"The challenge for policy is not to eliminate inequality per se but rather to spread economic opportunity as widely as possible. Policies that focus on education, job training, and skills and that facilitate job search and job mobility seem to me to be a promising means for moving toward that goal."
—February 6, 2007
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On central banking and bank supervision in the United States
"Because of demographic changes and rising medical costs, federal expenditures for entitlement programs are projected to rise sharply over the next few decades. Dealing with the resulting fiscal strains will pose difficult choices for the Congress, the Administration, and the American people. However, if early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost."
—January 18, 2007
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On central banking and bank supervision in the United States
"The information, expertise, and powers that the Fed derives from its supervisory authority enhance its ability to contribute to efforts to prevent financial crises; and, when financial stresses emerge and public action is warranted, the Fed is able to respond more quickly, more effectively, and in a more informed way than would otherwise be possible. "
—January 5, 2007
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2006

On the Chinese economy
"Further appreciation of the RMB, combined with a wider trading band and with the ultimate goal of a market-determined exchange rate, would allow an effective and independent monetary policy and thereby help to enhance China's future growth and stability."
—December 15, 2006
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On the economic outlook
"Over the next year or so, the economy appears likely to expand at a moderate rate, close to or modestly below the economy's long-run sustainable pace. Core inflation is expected to slow gradually from its recent level, reflecting the reduced impetus from high prices of energy and other commodities, contained inflation expectations, and perhaps further reductions in the rate of increase of shelter costs and some easing in the pressures on capital and labor resources. However, substantial uncertainties surround this baseline forecast."
—November 28, 2006
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On monetary aggregates and monetary policy at the Federal Reserve
"Although a heavy reliance on monetary aggregates as a guide to policy would seem to be unwise in the U.S. context, money growth may still contain important information about future economic developments. Attention to money growth is thus sensible as part of the eclectic modeling and forecasting framework used by the U.S. central bank."
—November 10, 2006
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On Community Development Financial Institutions—promoting economic growth and opportunity
Monetary policy is a blunt tool that cannot target industries, population groups, or regions. In contrast, CDFIs [community development financial institutions] operate primarily at the microeconomic level, community by community. Using techniques such as financial counseling, local market research, and specialized lending, CDFIs work with partners in both the public and the private sectors to help unlock the economic potential of lower-income and underserved communities.
—November 1, 2006
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On bank regulation and supervision: balancing benefits and costs
Good regulatory and supervisory policies should implement congressional intent in ways that maximize social benefits and minimize social costs.... In developing regulatory and supervisory policies, the Federal Reserve and the other banking agencies will continue to pay close attention to the implications of those policies for regulatory burden, competitiveness, and efficiency in banking.
—October 16, 2006
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On the coming demographic transition: Will we treat future generations fairly?
If current trends continue, the typical U.S. worker will be considerably more productive several decades from now. Thus, one might argue that letting future generations bear the burden of population aging is appropriate, as they will likely be richer than we are even taking that burden into account. On the other hand, I suspect that many people would agree that a fair outcome should involve the current generation shouldering at least some of that burden, especially in light of the sacrifices that previous generations made to give us the prosperity we enjoy today.
—October 4, 2006
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On productivity
Few jobs or occupations have not been affected in some way by the technological changes of recent years, a trend that will certainly continue.... But new technologies will translate into higher productivity only to the extent that workers have the skills needed to apply them effectively.
—August 31, 2006
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On global economic integration
The challenge for policymakers is to ensure that the benefits of global economic integration are sufficiently widely shared—for example, by helping displaced workers get the necessary training to take advantage of new opportunities—that a consensus for welfare-enhancing change can be obtained.
—August 25, 2006
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On economic education
No matter what your age or educational background—whether you are a student, an entrepreneur, a homemaker, or a professor—the Fed has resources to help you learn more about economics and to help you participate in the important national conversations we must have about these issues. In the end, I believe you will find that economic education is one of the best investments you can make for your own future and for the future of your family, your community, and our nation.
—July 2006
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On monetary policy
Although our baseline forecast is for moderating inflation, the [Federal Open Market] Committee judges that some inflation risks remain.... Persistently higher inflation would erode the performance of the real economy and would be costly to reverse. The Federal Reserve must take account of these risks in making its policy decisions.
—July 19, 2006
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On energy and the economy
Energy prices have moved up considerably since the end of 2002, reflecting supply and demand factors. In the short run, prices are likely to remain high in an environment of strong world economic growth and a limited ability to increase energy supplies.... However, in the long run, market forces will respond. The higher relative prices of energy will create incentives for businesses to create new, energy-saving technologies and for energy consumers to adopt them.
—June 15, 2006
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On increasing economic opportunity: challenges and strategies
Many factors influence consumer financial behavior. Financial education is clearly central to helping consumers make better decisions for themselves and their families, but policymakers, regulators, nonprofit organizations, and financial service providers must all help ensure that consumers have the tools and the information they need to make better decisions.
—June 13, 2006
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On modern risk management and banking supervision
As risk-management practices continue to evolve, the gulf between the determinants of minimum regulatory capital under Basel I and what these banks actually do to manage risk will widen. Most important, if the regulatory capital required of these organizations does not adequately reflect the risks they are actually taking, the safety and soundness of the U.S. banking system may be jeopardized.
—June 13, 2006
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Commencent address at the Massachusetts Institute of Technology
When the economics is right, scientific and technological advances promote economic development, which in turn, in a virtuous circle, may provide resources and incentives that help to foster more innovation.
—June 9, 2006
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On on the outlook for the U.S. economy and monetary policy
The FOMC must continue to resist any tendency for increases in energy and commodity prices to become permanently embedded in core inflation. The best way to prevent increases in energy and commodity prices from leading to persistently higher rates of inflation is by anchoring the public's long-term inflation expectations. Achieving this requires, first, a strong commitment of policymakers to maintaining price stability, which my colleagues and I share, and, second, a consistent pattern of policy responses to emerging developments as needed to accomplish that objective.
—June 5, 2006
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On financial literacy
Clearly, to choose wisely from the variety of products and providers available, consumers must have the financial knowledge to navigate today’s increasingly complex financial services marketplace. Consumers with the necessary skills to make informed financial decisions about purchasing a home, financing an education or their retirement, or starting a business will almost certainly be economically better off than those lacking those vital skills.
—May 23, 2006
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On Basel II: Its promise and its challenges
No immediate crisis requires us to move toward Basel II, but the gradual evolution of market practice and the emergence of very large and increasingly complex banking organizations operating on a global scale require that we make significant changes in the way we assess capital adequacy at these organizations.
—May 18, 2006
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On hedge funds and systemic risk
Continued focus on counterparty risk management is likely the best course for addressing systemic concerns related to hedge funds.... [It] places the responsibility for monitoring risk squarely on the private market participants with the best incentives and capacity to do so.
—May 17, 2006
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On the outlook for the U.S. economy
The FOMC will continue to monitor the incoming data closely to assess the prospects for both growth and inflation. In particular, even if in the Committee's judgment the risks to its objectives are not entirely balanced, at some point in the future the Committee may decide to take no action at one or more meetings in the interest of allowing more time to receive information relevant to the outlook. Of course, a decision to take no action at a particular meeting does not preclude actions at subsequent meetings, and the Committee will not hesitate to act when it determines that doing so is needed to foster the achievement of the Federal Reserve's mandated objectives.
—April 27, 2006
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On data and measurement in community economic development
Free markets can be a powerful source of economic development, but markets work less effectively when information about potential opportunities is absent or costly for private actors to obtain.
—April 20, 2006
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On personal financial literacy
Increasingly, personal financial security requires the ability to understand and navigate the financial marketplace.... Financially literate consumers make the financial marketplace work better, and they are better-informed citizens as well.
—April 5, 2006
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On the yield curve and monetary policy
Ultimately, a robust approach to [monetary] policymaking requires the use of multiple sources of information and multiple methods of analysis, combined with frequent reality checks. By not tying policy to a small set of forecast indicators, we may sacrifice some degree of simplicity, but we are less likely to be misled when a favored variable behaves in an unusual manner.
—March 20, 2006
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On community banking and community bank supervision in the twenty-first century
The performance of community banks over the past decade has been very impressive. But neither bankers nor their supervisors should become complacent. Doubtless the future will continue to require both of us to evaluate and respond to changes that are often complex and difficult to understand, much less to predict.
—March 8, 2006
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On the benefits of price stability
Central bankers, economists, and other knowledgeable observers around the world agree that price stability both contributes importantly to the economy's growth and employment prospects in the longer term and moderates the variability of output and employment in the short to medium term.
—February 24, 2006
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Semiannual monitary policy report to Congress
Monetary policymakers must...strike a difficult balance—conducting rigorous analysis informed by sound economic theory and empirical methods while keeping an open mind about the many factors, including myriad global influences, at play in a dynamic modern economy like that of the United States.
—February 15, 2006
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At the ceremonial swearing-in by President Bush
It is incumbent on the Federal Reserve to report regularly to, and work closely with, the Congress. I look forward to a strong and constructive relationship with members of both the House and Senate.
—February 6, 2006
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