If policymakers fail to manage the large volume of reserve balances, it could make it more difficult for the Fed to raise short-term rates when recovery begins, Federal Reserve Board chairman Ben S. Bernanke said Friday.

“The large volume of reserve balances outstanding must be monitored carefully, as — if not carefully managed — they could complicate the Fed’s task of raising short-term interest rates when the economy begins to recover or if inflation expectations were to begin to move higher,” Bernanke told a Federal Reserve Bank of Richmond symposium, according to prepared text released by the Fed.

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