WASHINGTON (AP) – 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.

“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 told his counterparts at the annual gathering.

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.

At the conference, Bernanke was joined by leaders of the central banks of the world’s major economies – European Central Bank President Jean-Claude Trichet and Chinese central bank governor Zhou Xiaochuan. Kazumasa Iwata, deputy governor of Japan’s central bank, also attended.

In his speech, Bernanke didn’t talk about what the Fed’s next move on interest rates might be. The other central bankers didn’t offer clues about the direction of interest rates in their countries, either.

In the United States, many economists are predicting that the Federal Reserve will once again hold rates steady when it meets next on Dec. 12, the Fed’s 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.

During a question and answer period, Bernanke said the Fed keeps tabs on so-called “inflation expectations” – the direction that consumers, businesses and investors think prices are taking.

Bernanke said that can give the Fed important insights about what Main Street and Wall Street are thinking about inflation. But monitoring inflation expectations is just once piece of information the Fed looks at to get a grip on the nation’s price climate, he said.

“We do look at expectations; we think it is informative in a number of ways,” Bernanke added. But, he said, “We certainly don’t substitute expectation data” for more authoritative analysis and figures.

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