Bernanke took office in February

Bernanke took office in February promising to make central bank policy more transparent. Four months later, a number of economists and traders say the Fed chairman and other central bank officials have stumbled by making too many contradictory statements, muddying the outlook and spooking markets.

The complaints got louder Monday after Bernanke told a banking group inflation was at an "unwelcome" level, raising the specter of further Fed interest rate increases. That appeared counter to April congressional testimony in which Bernanke suggested the central bank could pause from its two-year campaign of interest rate increases, even if inflation was a risk.

The Dow Jones industrial average fell nearly 200 points Monday and another 47 points Tuesday.

"Give us a break, please. Can we have just one week, or at least one day, without some Fed official obsessing publicly about containing inflation?" says Ed Yardeni, chief investment strategist at Oak Associates. "They are giving us more information than we need."

The issue goes beyond language, however. There are a number of reasons the Fed is taking flak as it tries to wind up a drive that has pushed short-term interest rates to 5% from a historic low of 1% in mid-2004:

• The economy is changing. Minutes of the March 27-28 meeting of the Fed's policymaking Open Market Committee show members believed the end of the tightening cycle was near, with some expressing concern the Fed could push rates too high. Bernanke's April testimony echoed those comments. The markets, however, interpreted Bernanke's "pause" statement as soft on inflation. Further, in recent weeks core inflation, which doesn't include food and energy, has been running above the Fed's 2% projection.

As the Fed responded to market concerns and altered conditions, its message necessarily changed.

"The end of tightening cycles are often controversial. We see more disagreement on the Fed committee about what the stopping point is; we see more skittishness in the markets," says Brian Sack of Macroeconomic Advisers, a former Fed economist. "This was a tricky time to have a transition to a new chair."

• There are disagreements on policy. While some analysts applaud Bernanke's emphasis on inflation, others say the central bank is not paying enough attention to economic cooling. They fear the Fed will push rates too high, choking growth. "The Fed is overly concerned with inflationary pressures and less concerned with the slowing of economic activity ... the consumer is getting whacked" by rising rates and energy prices, says David Lereah, National Association of Realtors' chief economist.

• There are too many voices. Bernanke doesn't yet have the same control that former chairman Alan Greenspan had over the Open Market Committee. Traders and economists are paying more attention to sometimes conflicting statements of Fed governors and regional bank presidents to try to figure out policy.

"They should really leave it to one spokesman, and that should be the Fed chairman," Yardeni says.

• Bernanke doesn't have Greenspan's inflation-fighting credentials and reputation.

"He needs to quickly realize that the markets around the world care very much about every word that comes out of his mouth," says Gary Kaltbaum, a money manager at Kaltbaum & Associates. "Potentially, it could be a longer-term positive that he is going to stand up to inflation if it is occurring ... (it's) better than doing nothing and letting things get out of hand.