Policy makers are weighing how to offer more information about the Fed's goals, and how such targets influence its decisions. Most FOMC members favor providing more information than the economic forecasts the Fed publishes quarterly, according to minutes of the Sept. 20-21 session. The FOMC has established a working group to study transparency initiatives.

'Normal Times'

“In more normal times, when short-term policy rates are not constrained, I expect that balance-sheet policies will be rarely used,” Bernanke said in a speech at the Boston Fed's annual economic conference.

Dallas Fed President Richard Fisher, Narayana Kocherlakota of Minneapolis and Charles Plosser of Philadelphia dissented from the decisions at the Fed's last two meetings. Fisher, who has dubbed the Fed's Operation Twist “jujitsu with the yield curve,” said in a Sept. 27 speech that the central bank's recent moves “are likely to prove ineffective and might well work against job creation.”

Kocherlakota said in a speech last week that “the committee's actions at the last two meetings are inconsistent with a systematic pursuit of its communicated objectives,” noting that unemployment of 9.1 percent in September was down from the 9.8 percent reported in November while most measures of inflation have risen.

Long-Run Estimates

Currently, the FOMC publishes its range of long-run estimates for gross domestic product, unemployment and inflation, a proxy for policy goals. The range for inflation in June, for example, was 1.7 percent to 2 percent as measured by the personal consumption expenditures price index. The range for unemployment was 5.2 percent to 5.6 percent.

The Fed has drawn criticism from top Republican lawmakers, who sent Bernanke a letter before the last meeting asking him not to do “further harm” to the economy and to better explain the Fed's actions.

Lawmakers, including House Speaker John Boehner and Senate Minority Leader Mitch McConnell, urged Bernanke to refrain from further monetary stimulus, “particularly without a clear articulation of the goals of such a policy” and “ample data proving a case for economic action.” Americans, they said, “have reason to be skeptical” of his plans.

Flexible Targeting

While the Fed lacks a “formal, numerical inflation target,” its policies have “many of the elements of flexible inflation targeting,” Bernanke said. “Like flexible inflation targeters, the Federal Open Market Committee is committed to stabilizing inflation over the medium run while retaining the flexibility to help offset cyclical fluctuations in economic activity and employment.”

Policy makers' long-run inflation projections are “analogous” to targets even though they aren't a “formal inflation goal of the Committee as a whole,” Bernanke said.

Flexible inflation-targeting has helped the Fed in manage expectations about prices, Bernanke said.

“The commitment to a policy framework that is transparent about objectives and forecasts was helpful, in many instances, in managing those expectations and thus in making monetary policy both more predictable and more effective during the past few years than it might otherwise have been.”

Bernanke also said that monetary policy may be “too blunt a tool” to control asset-price bubbles. Instead, he said, measures such as ensuring adequate bank capital and liquidity “should be used to address developing risks to financial stability, such as excessive credit growth.”

10-Year Yields

The yield on 10-year Treasuries fell to a record close of 1.72 percent the day after the Fed announced its program to lengthen maturities of the bonds in its portfolio, known as Operation Twist. The yield has since risen to 2.18 percent as of 4:51 p.m. in New York. Lower yields may help reduce borrowing costs across the economy, boosting industries including autos and housing.

Investors have raised their bets for price gains in recent weeks, as measured by the difference between inflation-adjusted and nominal Treasury securities over the next 10 years. Those expectations rose to 1.99 percent inflation today. That's up from 1.71 percent, their lowest level of 2011, on Sept. 22, the day after the Fed announced Operation Twist.

“Low interest rates for the entire industry is one of the reasons that we think that despite some economic volatility, the auto industry in general continues to be a bright spot in the economy, and we expect that to continue,” Robert Carter, U.S. sales vice president for Toyota Motor Corp., the world's largest carmaker, said during an Oct. 3 conference call.

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