Leading SA economists respond to Dr Ben S. Bernanke’s address at the 2014 Discovery Leadership Summit

In one of his first formal public addresses since his recent retirement as Chairman of the US Federal Reserve, Dr Ben S. Bernanke addressed delegates as the keynote speaker at the 2014 Discovery Leadership Summit.

In a one-on-one Q&A session, Discovery CEO Adrian Gore posed a series of questions, including ones submitted by renowned South African economists.

After Bernanke’s address, Nazmeera Moola, economist and strategist at Investec Asset Management, commented, saying: “Bernanke clearly believes that everything he did in his time as Governor of the Fed since 2008 was done to shore up the US financial system. He acknowledged that they underestimated the impact of falling house prices in late 2007 and in early 2008, they moved decisively – even when their actions were unpopular. With the benefit of hindsight, it's easy to criticise Bernanke's actions over the last five years. But without them, the global economy could have been in a far worse position today.”

Moola noted that several years ago, there were complaints from emerging markets that Quantitive Easing (QE) was pushing inflows into their markets, causing currency appreciation and many of the imbalances that are now so problematic. “At the time, despite consultation, those concerns were subsumed to US domestic worries. To some extent, the imbalances that have caused the current instability in many emerging markets is partially due to QE.”

“When asked about whether the US Fed should take into account the impact of their actions on emerging markets, Bernanke said two things,” Moola added. “Firstly, he noted that the Fed has always consulted widely with other central banks and has always attempted to communicate clearly. Secondly, he pointed out that emerging markets should act to contain their own imbalances at this juncture.”

Sizwe Nxedlana, Chief Economist at FNB, also acknowledged the Fed’s regular communication with the central banks of emerging markets, which he found encouraging, and said that it boded well for their greater collaboration with emerging markets. Nxedlana further remarked that if the QE tapering is due to improving growth, then it should benefit everyone.

Gore concluded the 2014 Discovery Leadership Summit by thanking Dr Ben S. Bernanke for his participation at the Summit, and expressing his desire to delve deeper into the wealth of knowledge and insight Bernanke could offer.