FED IS BERNED BY BEN

Blew it on inflation

The banker who steered the US through the Great Recession blamed the Federal Reserves’ current leadership for moving too slowly to curb inflation.

“I think in retrospect, yes, it was a mistake. And I think they agree it was a mistake,” Ben Bernanke said on CNBC Monday.

Critics have argued the Fed has exacerbated the crisis, which has strangled American households in recent months, by failing to act when signs of inflation began blinking red last year.

Bernanke, who served as Fed chair from 2006 until 2014 and shepherded the economy through 2008, said to the COVID-19 challenges have complicated the bank’s task.

“There were a couple of issues that I think are related primarily to the pandemic itself and the way it has scrambled the usual indicators and made it harder for the Fed to read the economy,” Bernanke said.

Bernanke’s comments come a day after former Goldman Sachs Chief Executive Lloyd Blankfein warned there is a “very, very high risk” of recession — and said if he were still running a “big company,” he would “be prepared” for that possibility.

The Fed enacted its steepest hike to interest rates in 22 years earlier this month — highlighting the extent of an inflation challenge that current bank boss Jerome Powell and other top economic officials once dismissed as “transitory.”

Dire prediction

Supply chain disruptions, which have been slower to ease than economic officials expected, were another factor in the Fed’s delayed response, according to Bernanke.

“The Fed believed, in the middle of 2021, that these factors would likely solve themselves over time. In other words, that the supply shocks were ‘transitory’ and so they didn’t need to respond to the early stages of inflation because it was going to go away by itself. That proved wrong,” he added.

In a “Face the Nation” appearance Sunday, Blankfein warned that recession is “definitely a risk” and that both billion-dollar corporations and consumers should prepare for it.

Blankfein conceded that the Federal Reserve is “responding well” and “has very powerful tools.” But he cautioned that “it’s hard to finely tune them, and it’s hard to see the effects of them quickly enough to alter” the likelihood of recession.