Mumbai: Targeting inflation is a key agenda for a central bank, former US Federal Reserve chairman Ben Bernanke said on Tuesday, as it makes monetary policy more transparent and the markets know what to expect.

“Monetary policy benefits from clarity and transparency," Bernanke said. “In a country where inflation is high, it is important that the market knows what you are doing." To be sure, even with a single mandate, a central bank has to pay attention to growth to some extent, he said.

Bernanke’s statement will boost the Reserve Bank of India’s efforts to target inflation in a more dedicated manner. A central bank panel headed by RBI deputy governor Urjit Patel had recommended that the bank should make inflation-targeting its central purpose. RBI is yet to accept the recommendations fully.

An independent central bank is critical for a smooth functioning of the economy, Bernanke said. “I do think in a mature economy like that India is becoming, an independent central bank is central," he said. Bernanke, who served two terms as chairman of the Federal Reserve till 31 January, said it wasn’t right to say that the US central bank doesn’t think about other emerging markets while formulating its policies. “There is a perception in some quarters that the US doesn’t pay attention to emerging markets," Bernanke, now an economist at Brookings Institution, said in Mumbai. “Nothing can be further than the truth."

Under Bernanke, the Fed started buying $600 billion in mortgage-backed securities to bail out US banks from November 2008, after the global financial crisis. There were three rounds of quantitative easing.

The liquidity flooded financial markets in emerging economies such as India. In June last year, Bernanke said the US central bank will start tapering its bond-buying programme by $10 billion a month. The rupee slumped to its record low of 68.85 a dollar in August as investors exited investments in India, seeking the safety of dollar assets. The US central bank now buys $55 billion a month in bonds.

Reserve Bank of India governor Raghuram Rajan last week called for global coordination in monetary policy making and advocated safety nets to protect emerging market economies from the spillover effects of easy money policy.

Bernanke said the Fed met various central bank governors of emerging markets eight to nine times at various venues and spent time listening to them for hours. “The Fed’s mandate is to manage the US economy. But the US is part of a global system," he said. Bernanke said it is better for emerging markets if the US and other industrialized nations recover fast. “I am moderately optimistic on the fundamentals," he said. “It looks like the US economy is doing better."