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 web site.

2008

"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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