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House Republicans grill Bernanke over inflation threat
Question of the Day
WASHINGTON (AP) — Members of Congress sharply questioned Federal Reserve Chairman Ben S. Bernanke on Wednesday over whether the Fed’s policies are raising the risk of higher inflation in the months ahead.
Rep. Paul D. Ryan, Wisconsin Republican, who is House Budget Committee chairman, said he is concerned that the Fed won’t be able to detect inflation until “the cow is out of the barn” and inflation is already spreading dangerously through the economy.
Mr. Bernanke acknowledged that inflation is surging in emerging economies, but he downplayed the risks to the U.S. economy, even as lawmakers expressed concerns about rising gasoline and food prices.
Inflation in the United States remains “quite low,” Mr. Bernanke said. He blamed higher prices on strong demand from fast-growing countries such as China— not the Fed’s policies to stimulate the economy, including buying $600 billion worth of Treasury debt.
Mr. Bernanke’s remarks suggest the Fed will stick with the bond-buying plan through June, as scheduled. The program is aimed at invigorating the economy by lowering rates on loans and boosting prices on stocks.
“Many of us fear monetary policy is on a difficult track,” Mr. Ryan said.
Mr. Bernanke also defended the bond-purchase program, saying it is needed to ease high unemployment. He credited all the Fed’s stimulus policies with creating or saving 3 million jobs over the past several years.
The unemployment rate was 9 percent in January after the fastest two-month decline in 53 years. Mr. Bernanke said the drop is encouraging but cautioned that it will take several years for hiring to return to normal. He said the economic recovery won’t be assured until companies step up hiring on a consistent basis.
Mr. Bernanke is making his first appearance before the House since Republicans took control last month. He faced some tough questions from them, despite being a member of the party.
Mr. Ryan favors budget cuts to get the deficits under control.
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