Inside Ben Bernanke are two birds. The hawk hates inflation. The dove hates unemployment. On Aug. 1 the chairman of the Federal Reserve expressed his inner hawk. Despite the longest period of high unemployment since the Great Depression and inflation that’s actually below the Fed’s target, the rate-setting committee that he runs stood pat. At the end of a two-day meeting in Washington, the Federal Open Market Committee issued a statement acknowledging that the U.S. economy has “decelerated somewhat” but did not announce any fresh measures to stimulate growth. Doves were dismayed, if not surprised: “They really took a pass,” says University of Oregon economist Tim Duy, who runs the Fed Watch blog.
Bernanke is a reluctant revolutionary. After the global financial crisis of 2008-09 broke out, he pushed the nation’s central bank into radical actions not attempted since its founding in 1913, including near-zero interest rates and more than $1 trillion worth of bond buying. He did it because he saw no choice. Every step of the way, he looked the part of a quiet academic who would rather be working on his next paper for the Journal of Money, Credit and Banking.