WASHINGTON, Dec. 16 (Xinhua) -- U.S. Federal Reserve Chairman Ben Bernanke said on Monday that improved communication helps the public understand the Fed's policy intention and rationale, which is key to the legitimacy of the central bank.
"Improved communication can help our policies work better, whether through the disclosure of bank stress-test results or by helping the public and market participants better understand how monetary policy is likely to evolve," said Bernanke at a Fed event celebrating the institution's centennial.
The central bank chief said the Fed's ability to make and implement decisions ultimately depends on the public's understanding and acceptance of its actions.
"Clarity, transparency, and accountability help build public confidence in the Federal Reserve, which is essential if it is to be successful in fostering stability and prosperity," said Bernanke, who is set to step down at the end of January and to be replaced by vice chairwoman Janet Yellen, whose nomination awaits Senate confirmation.
"We must do all that we can to explain our actions and to show how they serve the public interest. That's why we must welcome communication, broadly defined," he added.
Promoting greater transparency has been an important goal Bernanke pursued in his tenure. The Fed adopted 2 percent as its target for inflation two years ago, and relied more heavily on " forward guidance" as a tool to stimulate economy as the short-term interest rates have been stuck near zero since late 2008.
The Fed policy-setting committee will hold a two-day meeting from Tuesday to Wednesday. Top officials will discuss whether the U.S. economy is strong enough to justify a tapering of its 85- billion-dollar monthly asset purchase.
Without specifically mentioning future monetary policy actions or the U.S economy, Bernanke said the Fed's work on achieving a full economic recovery from the crisis is "still ongoing."
The Fed was created by the Federal Reserve Act, which was signed into law by former U.S. President Woodrow Wilson on Dec. 23, 1913.