Former Federal Reserve chair Ben Bernanke said in a Sunday interview that the Fed may be able to avoid a recession and address inflation with a “soft-ish landing.”
“I think a recession is possible,” Bernanke told CNN’s Fareed Zakaria when asked if he agreed with former Treasury Secretary Larry Summers’ calculation that the Fed could induce a recession in tackling inflation.
“Economists are very bad at predicting recessions, but I think the Fed has a decent chance, a reasonable chance at achieving what [current Federal Reserve chair Jerome] Powell calls a soft-ish landing, either no recession or a very mild recession to bring inflation down.”
Bernanke also said he doesn’t believe that the current state of the U.S. economy resembles the stagflation of the 1970s or that the U.S. is out of tools to solve economic problems.
“A very basic difference is that the inflation of the 70s lasted for 13 or 14 years and not six months, so people became very, very used to inflation and a huge inflation psychology developed. I think it’s a very different situation. Today, we have a Federal Reserve that knows it’s responsible for inflation. It’s going to take the lead. It’s got a lot of credibility. We’ve had low inflation now for 40 years. It’s got political support,” Bernanke said.
The inflation rate hit 8.6% in May, the highest in four decades.