Like the subject of his comments, President Obama’s sparse words to Charlie Rose about Federal Reserve Chairman Ben Bernanke were almost uncanny in their ability to send Fed watchers into a state of convulsion.
In an interview that aired this week, Obama said of the economist who’s led the U.S. central bank since 2006: “He’s already stayed a lot longer than he wanted or he was supposed to.” And later that day, former Fed governor Laurence Meyer provided his commentary: “He essentially fired Ben Bernanke on the spot and gave him a fairly tepid testimonial afterward.”
Whether or not that’s true, the reactions to Obama’s comments certainly struck a nerve, and that speaks to the lack of certainty over the economy after Bernanke’s departure. Bernanke’s likely exit has been on the radar for some time, but this week’s developments forced Fed watchers to start seriously considering a post-Bernanke era.
Pimco’s Mohamed El-Erian tackled the issue of life after Bernanke in a commentary Tuesday. He noted that the next Fed chair won’t have a lack of challenges on his plate:
“He leaves his successor with a set of unprecedented and unresolved problems to contend with, from weaning the economy off life support to navigating the consequences of an unusually large balance sheet. And with so much uncertainty about the success of the Bernanke way, econ textbooks and quarterly unemployment figures just don’t hold enough answers to how his stewardship of the U.S. economy will play itself out in the years ahead.”
As such, Bernanke will need to lay a firm foundation for his successor, El-Erian writes:
“But let’s hope that he is also remembered for having built the foundation that enabled his successor, working with a more functional political system, to guide the United States back to the path of high economic growth, robust job creation, low inflation, and greater wealth equality. That would be a new normal we could all get behind.”
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