IBJNews

Bernanke makes strong defense of Fed rate policies

Back to TopCommentsE-mailPrintBookmark and Share

Chairman Ben Bernanke offered a sharp defense Monday of the Federal Reserve's bold policies to stimulate the weak economy, while cautioning Congress to respect its private discussions.

The Fed needs to drive down borrowing rates because the economy isn't growing fast enough to reduce high unemployment, Bernanke said in a speech to the Economic Club of Indiana. The unemployment rate is 8.1 percent. (See below for video highlights of Bernanke's speech.)



Low rates could help lower the federal budget deficit by reducing the government's borrowing costs and generating more tax revenue through stronger growth, Bernanke said.

Bernanke also cautioned Congress against changing the law so it could review the Fed's interest-rate policy discussions. Such a step would improperly inject political pressure into those talks and make Fed policymakers less likely to act, Bernanke warns.

The speech comes just weeks after the Fed voted at its Sept. 12-13 meeting to purchase $40 billion a month in mortgage-backed securities to push mortgage rates lower and help boost the housing market. The Fed left the program open ended, saying only that it would keep buying the bonds until the job market showed substantial improvement.

The Fed also said at the September meeting it plans to keep its benchmark short-term interest rate near zero through at least mid-2015, six months longer than its previous target date of late 2014.

The Fed's action was approved on an 11-1 vote.

The U.S. economy is struggling more than three years after the Great Recession ended. High unemployment and weak pay growth has made consumers more cautious about spending, which has hurt manufacturing and slowed broader growth.

The Fed is hoping to make home buying more attractive to help the broader economy. When home prices rise, people typically feel wealthier and spend more. Consumer spending drives nearly 70 percent of economic activity.



The Economic Club scheduled Bernanke for the speech about six months ago.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Again, Maria.... how much are YOU contributing? The man doesn't HAVE to give a red cent! What don't you get about that? And, I know this might actually require some actual "facts", but can you please point me to the parking garage that the city gave to him?

  2. Another internet tuff guy I see. And what would the basis of taking the person to jail? If they were drunk, yea. But if not, there would be no jailable offense. All these gestapo, Nazi, jackboots are running SCARED. When the SHTF in this country who's side are you going to be on? The citzens, or the establishment? Better make up your mind quick because it's not far off. I would rather be trying to make friends than enemies. But no worries my "friend", God will take care of you and your likes in good time. It tells us that in the bible. If you stand, support and help carry out the plans of evil rulers, you will NOT be spared the wrath of God. That simple. All you can do is repent now and ask God to forgive you.

  3. Yes, Ersal, thank you for donating a whole $75,000, while the city gives you a parking garage for free and is going to pay for a multi million dollar stadium for you. I'd be donating money too if I was on welfare.

  4. I live and work in Broad Ripple and agree 100% that the traffic is not a significant problem. It can be slow at some times, but hey...this is an urban area. As for the development itself...HOORAY. Office and retail development brings people during the day, something that our community needs much more of. Thank goodness people are finally waking up to take advantage of the serene White River views. The BRVA land us committee endorsed the project because they know how these kind of projects help offset the cries of "too many bars". Pray that this development, and the proposed major investment by Browning, move forward. And remember Good Earth, these will mean hundreds of daytime people - potential shoppers for your store.

  5. Under current, previous existing law, this new law would be unconstitutional. Not that supposedly having to have a driver's license to drive isn't in the first place.

ADVERTISEMENT