From CNBC about Ben Bernanke’s testimony yesterday before the Senate Banking Committee: “In criticizing the central bank’s easy monetary policy, Sen. Bob Corker, a Republican from Tennessee, called Bernanke the biggest dove since World War II. Bernanke was quick to push back. “You called me a dove, well maybe in some respects I am, but on the other hand my inflation record is the best of any Federal Reserve chairman in the postwar period – or at least one of the best,” he said, citing the 2 percent average inflation rate.”
The chart above shows the annual inflation rate calculated from the Consumer Price Index on a monthly basis back to January 1948, and also displays the average inflation rate over the tenure of the last seven Federal Reserve Bank chairmen, starting with Thomas McCabe in 1948. Since Bernanke took over as Fed Chair just about seven years ago in February 2006, the average annual inflation rate has been 2.3%, and has fallen to an average of 2% over the last year. In seven out of the last nine months, the inflation rate has been below 2%.
Bottom Line: Bernanke is correct — he does have one of the best inflation records since WWII for Fed chairmen. Only William McChesney Martin’s record of 2.2% average inflation from April 1951 to January 1970 was just slightly below Bernanke’s record of 2.3% on average, but inflation was trending upward during the last decade of Martin’s tenure as Fed chair, and was above 6% when his term was ending in early 1970. In contrast, inflation in the most recent month of Bernanke’s term — January 2013 — was only 1.6%.
Update: The chart above now shows average annual inflation rates during the terms of the last seven Fed chairmen based on the GDP deflator (in parentheses), as an alternative inflation measure to CPI inflation. Note that based on GDP deflator inflation, Bernanke does have the best inflation record of any Fed chairman since WWII at 2.1% (1.8% for the most recent quarter).