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Bernanke Must Be Clear on Objectives: BofA Economist

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When Fed Chairman Ben Bernanke speaks from Jackson Hole, Wyoming on Friday, he must explain what the Federal Reserve's objectives are for the economy, Bank of America Chief Economist Mickey Levy told CNBC Thursday.

"In its recent statements, the Fed didn't explain its actions after modestly changing policy," Levy said. "He (Bernanke) needs to lay out what the Fed's views are on inflation by saying the objective is one to two percent. Implicit in that will be an understanding that it's going to avoid deflation."

The Federal Reserve board is holding its annual symposium in Jackson Hole, where Bernanke will deliver a speech on the economy, and Levy says it's the right time to give the markets a clear picture of what the Fed has in mind.

"If the Fed were to stick to an inflation target and agreement, then the markets would get a better understanding of the Fed's actions," Levy went on to say.

As for unemployment, Levy said there's not much the Fed can do except send out a strong message that it's going to fight both inflation and deflation.

"But there's something else it (the Fed) can do to help investors." Levy added. "Given the disagreements within the FOMC, it would be good if Bernanke identified the areas where the Fed agrees and that will give the markets a better idea of where the Fed is headed and make communication easier."

Levy also said that the US economy is in downward trend but that the probability of a recession is low.

"Certainly we are in a soft patch," Levy said. "But it's similar to patches in every previous expansion. The Fed needs to change policy or revise its economic outlook. But the Fed has to manage the confidence in the economy."