Bernanke Talks Up The Dollar

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The Fed chairman Ben Bernanke decried the weak dollar as a cause of inflation, today. No doubt there will a lot of talk about whether Bernanke got the causation backward--that the dollars weakness might be a result of inflation rather than the other way around. But before that debate kicks off it's worth noticing that Bernanke seems to have once again launched the Fed into a new area of policy making.
Alan Greenspan rarely, if ever, talked about the dollar's value in foreign exchange markets. Under his leadership, members of the Federal Open Market Committee were banned from venturing into this area. And until today, Bernanke had largely avoided it.
But just as Bernanke has launched a host of new policy tools aimed at easing the credit crisis, today he took the Fed into the realm of supporting a "strong dollar." It's got us calling him Captain Bernanke, who boldly goes where the Fed hasn't gone before.
Bernanke inflation risk comments ignite dollar rally [Reuters]

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