No hurry to hike, says former Fed chief Ben Bernanke

"As a form of forward guidance [in 2012], we promised we would not tighten until at least, at least until we got to 6.5 percent [unemployment report]. We didn't say we would tighten when we got to 6.5 percent," he said.

Reiterating the importance of the inflation target, he stressed: "The goal post was 2 percent inflation. We're not there yet."

Bernanke refused to second guess current Fed Chair Janet Yellen on her decision not to increase rates at the Fed's September meeting. "It is a tough call," he said, adding Friday's weak employment report for last month was a negative.

The debate on Wall Street has turned to whether the Fed might move at its next meeting, Oct. 27-28, or in December. But the futures market has basically ruled out this month and puts only 30 percent odds on December. The likelihood of a rate hike increases into next year, according to the CME FedWatch tool, which tracks daily market reaction on potential changes to the fed funds target rate.

Bernanke said slow productivity growth is weighing on the economy, and there's too much reliance on the central bank. He said other policymakers in the government need to step up.

The lower growth in the US economy is not a hangover from the Great Recession, Bernanke said, noting that more capital investment is needed to boost growth.

In the long term, low or no inflation has risks, he warned. "If inflation is so very, very low that it's close to deflation, the risk is that ordinary interest rates will be low all the time. ... What happens where there's a recession, there's no where to cut."

However, he insisted that the Fed should not have hiked already. "That doesn't make any sense. If you raised rates too early and kill the economy, that doesn't help you," he said.

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Bernanke was interviewed as the current Federal Reserve faces new challenges from a slowing China and whether the economic freeze there might put a lid on US growth.

The China slowdown has been "broadly anticipated," he said, because of Beijing's move to more of a consumer-driven economy. He said the open question is whether the economy there is slowing more than one would expect from such as transition.

Investors shouldn't get too worried about the recent problems in Chinese stocks, he argued, because the market there doesn't relate too much to the economy.

Growth has certainly been slower around the world, but the US economy has been doing better than others, Bernanke said, evidence the Fed's monetary policy since the financial crisis has been correct.

But he said no one can guarantee the Fed will foresee future bubbles.

"The Fed has been using easy money because the economy has needed a lot of support," he argued. "A better policy would be a better mix of monetary, fiscal, and other policies. The fact that the Fed is the only game in town means the Fed has to do too much."

The Fed has two mandates for monetary policy to keep inflation in check and promote maximum employment. Creating an environment to foster stability in the financial system, that's the third object, he said, but one that should be pursued on the regulatory and supervisory fronts, not monetary policy, "and to be tough about that."

Bernanke, now a distinguished fellow at the Brookings Institution, left the Fed in January 2014 at the end of his second term, after serving eight years as chairman during the turbulent times before and after the 2008 financial crisis. He's also a senior advisor to hedge fund Citadel and bond powerhouse Pimco.

He's on a promotion tour for his new book, "The Courage to Act: A Memoir of a Crisis and Its Aftermath."

Looking back at the financial crisis, he told CNBC there was no way to save Lehman Brothers, despite best efforts to prevent the investment firm's demise. He said the Lehman weekend and subsequent failure was the worst moment of his tenure as Fed chief.

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By contrast, he said, "It was a very difficult decision to intervene with AIG. We felt we had to, given Lehman had failed."

"They got all they needed in order to survive," he said, but the insurer was "charged a high interest rate" and equity was taken on behalf of the taxpayer. "In being tough" he continued, "we were doing something for AIG that we weren't doing for ... thousands of firms in the country that were going bankrupt without any help."

It was a "moral hazard," he said, "we had to do everything we could to minimize the windfall that we were giving to AIG stockholders."

When Bernanke took the Fed helm, stocks and the housing market were soaring to record heights, but not long after that he had to help rescue the nation from the brink of financial collapse.

Charting the course of Bernanke's tenure at the Fed, from the day he took the reins from Alan Greenspan until the day he passed the torch to Chair Janet Yellen, the Dow Jones industrial average gained about 45 percent. But from the depths of the Great Recession in 2009 until Bernanke's departure, blue chips more than doubled.