Former Federal Reserve Chair Ben Bernanke, who steered the central bank during the Great Recession, argued in a newly released paper that the Fed still has more work to do to bring inflation down.
“Looking forward, with labor market slack still below sustainable levels and inflation expectations modestly higher, we conclude that the Fed is unlikely to be able to avoid slowing the economy to return inflation to target,” Bernanke and Olivier Blanchard, a former International Monetary Fund chief economist, wrote in the paper released Tuesday.
Inflation has cooled in the past several months, according to the Fed’s preferred inflation gauge and the Consumer Price Index, though some Fed officials have said that it’s not cooling fast enough. The new study co-authored by the former Fed chair argued that the labor market has become a larger contributor of inflation, and might prove to be a stubborn source of price pressures that might only be remedied by an economic downturn.
Read More : Former Fed Chair Bernanke Calls for Further Economic Slowdown as Solution to Inflation