Fed Harms Itself by Missing Goals

July 10 (Bloomberg) -- Ben S. Bernanke has madetransparency one of the defining themes of his time at the helmof the Federal Reserve. The virtue of this transparency is thatit’s easy to evaluate how well the Fed is conducting monetarypolicy. And it has become transparently clear that the centralbank has failed to take the actions its own principles demand.

Bernanke is the first Fed chairman to clearly state a setof principles to guide monetary policy. They recognize the dualmandate set down by Congress -- that the Fed must try to balancelow inflation and unemployment -- and articulate goals for each.The Fed is targeting a 2 percent inflation rate and plans tokeep unemployment near its longer-run normal rate, which itcurrently judges to be between 5 percent and 6 percent. Byannouncing these goals, Bernanke hopes to reduce uncertainty andanchor the expectations of consumers and companies.