Feb. 27, 2013 – Federal Reserve Chairman Ben Bernanke, in testimony Tuesday for the Senate Banking Committee, offered a staunch defense of the Fed’s bond-buying policy, saying its benefits clearly exceed possible costs.
Delivering the Fed’s semiannual monetary policy report, Bernanke said Fed policymakers are aware of potential risks from their extraordinary support for the economy. He said the Fed has all the tools it needs to retreat from its monetary support in a timely fashion.
Currently, the Fed is keeping the federal funds rate target at a range of 0 to 0.25 percent as long as the unemployment rate is above 6.5 percent, near-term inflation remains at or below 2.5 percent and long-term inflation expectations continue to be well-anchored. It is also continuing to purchase mortgage-backed securities at a pace of $40 billion a month and longer-term Treasury securities at a pace of $45 billion per month, as well as reinvesting principle payments and rolling over maturing Treasury securities.
In Tuesday’s testimony, Bernanke said:
Bernanke testifies on the Fed’s monetary policy today before the House Financial Services Committee.
The Federal Open Market Committee, the Fed’s monetary-policy-setting arm, is set to hold its next meeting March 19-20.