The Federal Reserve closely follows the money supply but doesn't let that information alone set policy to steady the economy and keep inflation in check, Chairman Ben Bernanke said Friday.

In a scholarly speech to a conference of central bankers in Frankfurt, Germany, Bernanke provided an historical account of the changing role the money supply has played in Fed policymaking over the years.

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"Although a heavy reliance on monetary aggregates as a guide to policy would seem to be unwise in the U.S. context, money growth may still contain important information about future economic developments," Bernanke said in prepared remarks.

There have been challenges on that front, he said, noting that financial innovation and technology through the years have led to new kinds of bank accounts and other changes that have made accurately forecasting the nation's money supply tricky.

Those financial innovations also have made it difficult for policymakers at times to draw any firm conclusions or make accurate predictions about what changes in the supply and demand for money may mean for economic activity and inflation down the road.

"In response to regulatory changes and technological progress, U.S. banks have created new kinds of accounts and added features to existing accounts," Bernanke said. "More broadly, payments technologies and practices have changed substantially over the past few decades and innovations such as Internet banking continue. As a result, patterns of usage of different types of transactions accounts have at times shifted rapidly and unpredictably," he added.

In his prepared remarks, Bernanke didn't talk about what the Fed's next move on interest rates might be.

Many economists are predicting that the central bank will once again hold rates steady when the Fed meets next on Dec. 12, its last get-together of the year.

With economic growth slowing, the Fed at its last three meetings has kept its finger on the interest-rate pause button.

To combat inflation, the Fed had hoisted rates 17 times since June 2004, its longest string of increases in its history. The Fed's goal is to slow the economy sufficiently to fend off inflation but not so much as to push the economy into a recession.

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