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Fed Harms Itself by Missing Goals

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

Bernanke is the first Fed chairman to clearly state a set of principles to guide monetary policy. They recognize the dual mandate set down by Congress -- that the Fed must try to balance low inflation and unemployment -- and articulate goals for each. The Fed is targeting a 2 percent inflation rate and plans to keep unemployment near its longer-run normal rate, which it currently judges to be between 5 percent and 6 percent. By announcing these goals, Bernanke hopes to reduce uncertainty and anchor the expectations of consumers and companies.