Chairman Ben Bernanke offered a wide-ranging defense Monday of the Federal Reserve’s bold policies to stimulate the still-weak economy.
The Fed needs to drive down long-term 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 broaden Congress’ investigative authority over the Fed and allow a review of 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 affect the officials’ decisions.
CONTINUED at CBS DC.