Bernanke offers wisdom but no hint of Fed moves

WASHINGTON – Ben Bernanke gave the graduating class of Princeton University one of the more unusual speeches for a Federal Reserve chairman: He quoted everyone from Lily Tomlin to Forrest Gump and scarcely mentioned economics.

Bernanke’s words are normally scrutinized by global investors for hints about the Fed’s possible next move. But in his address Sunday on Princeton’s campus in New Jersey, he specifically cautioned that his comments “have nothing whatsoever to do with interest rates.” Instead, he took a poke at his profession.

“Economics,” Bernanke told the graduates, “is a highly sophisticated field of thought that is superb at explaining to policymakers precisely why the choices they made in the past were wrong.

“About the future, not so much.”

Bernanke also offered nothing that could be taken as a signal of when the Fed might begin to taper its $85 billion-a-month in bond purchases. Those purchases have been intended to keep loan costs at record lows to encourage borrowing and spending.

The stock and bond markets have been rattled by speculation that the Fed will start to scale back its bond purchases later this year. Once the Fed does so, interest rates would likely creep up.

Bernanke, wearing a black robe, delivered the baccalaureate address to about 1,300 graduates seated in University Chapel. He was introduced by Princeton University President Shirley M. Tilghman, who said that Bernanke’s academic research into the Great Depression while he was teaching at Princeton had prepared him to guide the U.S. economy as Fed chairman during the 2007-2009 Great Recession.

In his speech, Bernanke had a little fun with the culture of Washington, where he has spent nearly 11 years.

“In regard to politics, I have always liked Lily Tomlin’s line, in paraphrase, ‘I try to be cynical, but I just can’t keep up,'” he said.

Bernanke said it’s his impression that most Washington politicians and policymakers try to do the right thing most of the time.

“Public service isn’t easy,” he said. “But in the end, if you are inclined in that direction, it is a worthy and challenging pursuit.”