Bernanke: I Believe Americans Aren't Worried About Inflation OR Deflation

ben bernanke

Ben Bernanke believes that American inflation expectations remain on target, despite huge fluctuations in actual inflation over the last few years.

Inflation followed by disinflation canceled each other out:

CNBC:

“Despite increases in inflation a few years ago and now declines of inflation to very low levels, inflation expectations in the United States are very stable,” he told a question-and-answer session at a seminar in Tokyo hosted by the Bank of Japan.

Bernanke said most research considered low inflation as optimal and that price growth of around 2 per cent appeared to be right.

It’s easy to see his view as ridiculous, but it should be noted that the spread between the 10-year U.S. treasury and the 10-year inflation protected treasury remains at just 1.9%, which shows bond market inflation expectations at just about the level he mentions.

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