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The Fed Needs a New, Simpler Mandate

Last Friday’s disappointing U.S. jobs numbers came as less of a surprise to Ben Bernanke than to many others. The Federal Reserve chairman had warned that the earlier pace of improvement in the labor market might tail off. Unfortunately, being right about that won’t make his job over the coming months any easier.

In uniquely difficult circumstances, Bernanke has tried to make monetary policy more effective by using new tools and communicating the Fed’s thinking more fully. The first has worked well but the second hasn’t. The problem is that the Fed’s aims are opaque. That’s why greater transparency has done nothing to clarify its actions.