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Bernanke likens 2008 financial crisis to car crash

Ben Bernanke leaves the Fed Jan. 31 after eight years as chairman. His successor is Janet Yellen. He said there has not been a problem with inflation as a result of the Fed’s massive bond-buying program — despite critics’ worries — and that the economy still needs help.

Manuel Balce Ceneta/Associated Press

Ben Bernanke leaves the Fed Jan. 31 after eight years as chairman. His successor is Janet Yellen. He said there has not been a problem with inflation as a result of the Fed’s massive bond-buying program — despite critics’ worries — and that the economy still needs help.

WASHINGTON — In his final public appearance as chairman of the Federal Reserve, Ben Bernanke took a moment to reflect on the 2008 financial crisis and compared it to surviving a car crash.

In an interview Thursday at the Brookings Institution, Bernanke recalled ‘‘very intense periods’’ during the crisis.

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The government had just taken over mortgage giants Fannie Mae and Freddie Mac. Lehman Brothers had collapsed. He recalled some sleepless nights.

‘‘If you’re in a car wreck or something, you’re mostly involved in trying to avoid going off the bridge. And then, later on, you say, ‘Oh my God!’ ’’ Bernanke said.

Bernanke defended the Fed’s efforts during the crisis, which included massive purchases of Treasury bonds to push long-term interest rates lower and forward guidance to investors about how long the Fed planned to keep short-term interest rates near zero.

Critics have warned that those efforts pose risks for higher inflation or future market turmoil.

But Bernanke said there has not been a problem with inflation, which is still well below the Fed’s 2 percent target. Should inflation start to be a problem, as the economy starts growing at faster rates, the Fed ‘‘has all the tools we need to manage interest rates’’ to keep inflation from getting out of hand, he said.

‘‘Inflation is just not really a significant risk’’ from the bond purchases, Bernanke said.

Bernanke said the central bank is aware of potential threats to financial market stability from its massive bond holdings and is monitoring markets closely to spot any signs of trouble. He said this threat was the one ‘‘we have spent the most time thinking about.”

He said any concerns about financial stability don’t outweigh the need to keep providing support to the economy.

The Fed said last month that it would slightly the size of its bond purchases in January, from $85 billion per month to $75 billion.

And it said it will probably make further reductions at upcoming meetings, if the economy keeps improving.

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