Fed’s Yellen Is a Structural Dove Unlike Bernanke

Looking back, I would label Bernanke as a cyclical dove. His dovish nature about policy developed after a career of studying the Great Depression and what went wrong. He concluded that the main policy mistake was to remove stimulus too soon. The thrust of policy under Bernanke was to make policy stimulative and to keep it stimulative for a long time — beyond normal tolerance.

This is not an ideology but a policy formed after many hours of academic study. Even after substantial investigative efforts by reporters while Bernanke was chairman, no one was able to pin down Bernanke’s political proclivities. He simply wasn’t an ideologue.

In contrast, Yellen is a Democrat. Democrats believe in the inefficiency of economic systems and in the rightful role of government intervention. I think of Yellen as a structural dove. She and Bernanke were on the same page because of the state of the economy. As we go further down the road and as we put more distance between ourselves and the financial crisis, it is likely that the policy will fork in the road will come and that Yellen will go one way and that Bernanke would have gone the other.

via CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.