WASHINGTON –- There's no argument that globalization has reshaped the U.S. economy in the past decade, but Federal Reserve Chairman Ben Bernanke isn't convinced closer ties among the world's major economies have kept U.S. inflation in check.

Speaking on "Globalization and Monetary Policy" at the Fourth Economic Summit held at Stanford Institute for Economic Policy Research on Friday, Bernanke acknowledged globalization isn't fully understood by the Fed and may complicate policy making, a news source reported.

"Several decades of global economic integration have left a large imprint on the structure of the U.S. economy, including changes in patterns of production, employment, trade and financial flows…However, to make effective policy, the Federal Reserve must have as full an understanding as possible of the factors determining economic growth, employment and inflation in the U.S. economy, whether those influences originate at home or abroad….," the chairman stated.

Bernanke drew two conclusions on the issue of globalization's effect on the Fed's ability to set monetary policy: first, he stated, "the globalization of financial markets has not materially reduced the ability of the Federal Reserve to influence financial conditions in the United States."

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Second, he continued, "globalization has added a dimension of complexity to the analysis of financial conditions and their determinants, which monetary policy makers must take into account."

He added that aside from its influence on financial markets, "globalization may also have affected the operation of monetary policy by changing the relative importance of the various factors that determine the domestic inflation rate."

Still, said Bernanke, "when the offsetting effects of globalization on the prices of manufactured imports and on energy and commodity prices are considered together, there seems to be little basis for concluding that globalization overall has significantly reduced inflation in the United States in recent years; indeed, the opposite may be true…"

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