Less than a month into his new job, the chairman of the Federal Reserve, Ben Bernanke has wasted no time in confirming price stability as his major monetary policy goal. In his first speech since taking over from Alan Greenspan, Mr. Bernanke returned to his academic roots at Princeton University and delivered a veritable lecture on the need to control inflation.

Mr. Bernanke has been known as an advocate of inflation targeting, but he sidestepped any mention of that approach in his address Friday. By this omission, he may calm the concerns of those who view establishing a target inflation rate as untested and possibly disruptive. Instead, he reviewed monetary policy in recent decades, building the case that controlling inflation was central to the Fed’s mandate.

Though he mainly followed his prepared text, Mr. Bernanke also addressed issues raised by students ranging from possible bubbles in various markets to the low savings rate in America and the explosive growth of China.

Mr. Bernanke opposes Fed intervention for the purpose of influencing the prices of asset classes such as real estate or the stock market. Perhaps distancing himself from his predecessor, whose famous “irrational exuberance” comment was widely viewed as an attempt to prick the tech market bubble of the late 1990s, Mr. Bernanke denied that the Fed has any better information than the public with which to make valuation judgments. As a result, Mr. Bernanke concludes that the Fed should not interfere with asset prices.

The current low savings rate in America is a problem that must be addressed over time by reducing the federal budget deficit and creating a higher level of savings in the public sector, according to the new fed chair. Also, he projected that as home price inflation slows, individuals will likely return to saving a higher percentage of current income.

Mr. Bernanke described our relationship with China as currently complicated by an overvalued yuan that impairs China’s ability to set domestic monetary policy, and also results in excessive export-driven growth. “China needs to produce for its own people,” Mr. Bernanke observed. He also said that a more flexible yuan will con tribute to greater global stability.

The main thrust of Mr. Bernanke’s comments was the necessity of maintaining stable prices. The mandate for the Federal Reserve, reiterated as recently as 2000, includes achieving maximum employment, stable prices, and moderate long-term interest rates. Mr. Bernanke argued that stable prices and maximum employment are complementary goals, which together lead to moderate interest rates. Thus, maintaining orderly prices is reasonably both a means and an end of Fed policy.

He reminded the audience, which included former Fed chair Paul Volcker, that this position was not universally accepted during the 1960s and 1970s. At that time, economic doctrine held that the economy could achieve maximum employment only by allowing prices to creep up. This view was tarnished during the 1970s, when high levels of inflation led to numerous problems, including the savings-and-loan crisis.

Since that time monetary policy makers have committed to price stability, admitting its role in preserving the purchasing power of the dollar and the consequent integrity of tax and accounting rules. The Fed has also come to recognize the importance of price stability to long-term growth; only in a low-inflation environment can longterm investments be made with any degree of confidence. Even in the short term, price stability has led to less volatility of output.

In some ways, expectations of inflation can of themselves create volatility. Mr. Bernanke cited as an example the rise of oil prices in the 1970s. “Thirty years ago the public’s expectations were not well anchored and led to an upward spiral of prices.” Today, by contrast, the public’s expectation is that inflation is under control. Consequently, the rapid rise in oil prices last year has only modestly impacted prices and economic activity. The ultimate effect of this change in expectations has been that the Fed has not had to slam the brakes to control prices, but has been able to persist in a steady upward adjustment of rates designed to moderate growth and inflation.