The chairman of the Federal Reserve, who often gets questions about the US labor market, fielded queries Wednesday about his own personal job outlook.
Specifically, the question for Ben Bernanke was this: Is he hoping to stay or will he go when his current term ends early next year?
He was noncommittal, but offered some grist for pundits and speculators.
At a press conference following a scheduled policy meeting, Chairman Bernanke told one questioner that he has spoken with President Obama, the man poised to decide who will sit at the Federal Reserve helm come 2014.
But Bernanke gave no hint of the content of the conversation.
Bernanke did open up on a couple of points, though.
First, he apparently doesn’t support the idea that the Fed chairmanship should come with an eight-year term limit. One reporter asked about that, citing it as a common practice in Europe.
Bernanke declined to support the idea, and went out of his way to say the issue doesn’t seem to be on the minds of Capitol Hill lawmakers, who can set rules for the Fed. Bernanke has served almost eight years, and predecessor Alan Greenspan served nearly two decades.
Second, Bernanke said he doesn’t feel that, as the architect of an unconventional effort at monetary stimulus following the nation’s deep recession, he’s uniquely qualified to see that policy to conclusion.
“I don't think that I'm the only person in the world who can manage the exit,” Bernanke told a second questioner, referring to the need to phase out a massive bond-buying campaign at some point.
By purchasing Treasury and mortgage-related bonds at a rate of some $85 billion per month, the Fed has been trying to nudge the economy forward, at a time when the presence of a zero interest rate alone (for bank borrowing) hasn’t been sufficient. The idea of the effort, known as “quantitative easing” or QE, is that purchasing bonds will drive down long-term interest rates and boost economic confidence.
Bernanke has said the Fed’s extraordinary stimulus efforts will continue until the unemployment rate falls to about 6.5 percent from its current level of 7.7 percent. He reiterated that view – held by a Fed policymaking committee that he chairs – on Wednesday.
But he and other economists agree that someday an “exit” will be needed, by which the Fed will gradually reduce its holdings of bonds. Some forecasters say it could be a delicate task for the Fed to avoid an economy-damaging bond selloff, while also returning its own balance sheet to a more normal state.
Of course, saying he doesn’t need to manage the exit, doesn’t answer the question of whether Bernanke hopes to stay on.
We’ll all have to stay tuned. The pick is ultimately up to President Obama, and should become known well before Bernanke’s current term ends.
For now, Bernanke seems focused on the present.
He said the economy was improving, but that a sustained improvement in job-market conditions is needed before the Fed starts thinking about a policy shift.