Post 'face-off' Ben Bernanke supports Rajan on inflation

Raghuram Rajan will probably be thankful to Ben Bernanke for lending his shoulder to a few arguments based on inflation targeting.

Just a few days after the face-off between two of the world's important economies's chiefs comes a clarification . US Federal Reserve's former chairman Ben Shalom Bernanke on Tuesday said he has a lot of admiration for RBI Governor Rajan' s work as an academician.
 
Dismissing talks of any bad blood between the two, Bernanke downplayed the face-off claiming there was none.

CNBC-TV18's Latha Venkatesh reports Bernanke said that he and Rajan just disagreed on certain aspects of quantitative easing (QE). While discussing the spillover, he said he was optimistic that QE can be still effective while Rajan believed that incrementally QE would be less effective.

There are a couple of other things which Rajan perhaps will be thankful to Ben Bernanke for lending his shoulder to a few arguments. Bernanke was specifically asked on behalf of some questioners about inflation targeting and whether he supported it to which he said that inflation targeting was very good simply because it made it very clear to the market what the central bank was working at and that clarity itself would make policies effective.

He further added that inflation targeting doesn't mean the central bank ignores other goals. Infact, he was clearly pointing out that even central banks with inflation targeting as a mandate usually did not ignore other goals which squares very much with what Rajan says that he doesn't want to be an inflation nutter but is simply trying to bring down high levels of inflation.

 

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