Bernanke signals support for keeping interest rates low
WASHINGTON — Ben Bernanke sent a message on Tuesday to Congress: The Federal Reserve's low-interest-rate policies are giving critical support to an economy that's still burdened by high unemployment.
The Fed chairman acknowledged the risks of keeping rates low indefinitely, but he expressed confidence that such risks pose little threat now.
Delivering the Fed's semiannual monetary report to Congress, Bernanke sought to minimize concerns that the central bank's easy-money policies might cause runaway inflation later or dangerous bubbles in assets such as stocks. He sought to reassure sometimes-skeptical senators that the Fed is monitoring potential threats and can defuse them before they hurt the economy.
Several Fed policymakers said during their most recent meeting that the Fed might have to scale back its bond purchases because of the risks. Those comments, contained in minutes released last week, fanned speculation that the Fed might soon allow long-term borrowing rates to rise. Stock prices fell sharply.
But Bernanke gave no signal that the Fed might shift away from its low-interest-rate policy. He said its aggressive program to buy $85 billion a month in Treasurys and mortgage bonds had kept borrowing costs low. And that, in turn, has helped strengthen sectors such as housing and autos, he said.
Addressing concerns that the bond purchases, which have pushed the Fed's balance sheet to a record high above $3 trillion, could trigger high inflation, Bernanke said:
“Inflation is currently subdued and inflation expectations appear well-anchored. We do not see the potential costs of the increased risk-taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery and more-rapid job creation.”
Bernanke said that during the past six months, the economy has grown moderately but unevenly. He noted that the pause in growth in the final three months of 2012 “does not appear to be a stalling-out of the recovery,” and growth appears to have picked up in the past two months.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- LNG exports get federal approval from Dominion’s Cove Point terminal
- Cranberry-based Prodigo Solutions: Hospitals can reduce high supply costs
- Western Pa. unemployment rate holds steady in August
- With acquisition, PNC set to enter IPO market
- Study: Wellness programs don't save money, but employee health improves
- NHTSA probes sudden acceleration complaints in Toyota Corollas
- Consol, Noble spinoff raises $385 million in IPO
- Jobless baby boomers struggle to get back in game
- Another card system hack at Supervalu, Albertsons
- RadioShack decline belies its longevity
- Consumer spending climbs as job gains boost incomes