In a speech to the Economic Club of Indiana, Federal Reserve chairman Ben Bernanke delivered what the Washington Post described as “ his most aggressive response yet to critics of quantitative easing, the Fed’s policy of buying up long-term assets to stimulate the economy.”
The Associated Press offers a summary of this aggressive defense:
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.
Low rates could also help shrink the federal budget deficit by easing the government’s borrowing costs and generating tax revenue from stronger growth, Bernanke argued.
The chairman cautioned Congress against adopting a law that would allow it to review the Fed’s interest-rate policy discussions. The House has passed legislation to give Congress’ investigative arm broader authority to audit the Fed, including reviewing its interest-rate policymaking. The Senate hasn’t adopted the bill.
Bernanke warned that such a step would improperly inject political pressure into the Fed’s private deliberations and make officials less likely to act.