Federal Reserve supporting recovery
By Pedro Nicolaci da Costa |
December 7, 2010, Tuesday
|
Print Edition
Print Edition
THE Federal Reserve could end up buying more than the US$600 billion in United States government bonds it has committed to purchase if the economy fails to respond or unemployment stays too high, Fed Chairman Ben Bernanke said.
The Fed will regularly review the policy and could adjust the amount of buying up or down depending on the economy's path, he added.
In a rare televised interview, Bernanke told the CBS program "60 Minutes" the Fed's actions are aimed at supporting what is still a fragile economic recovery, dismissing critics who argue the policy will lead to future inflation.
"This fear of inflation I think is way overstated," Bernanke said in the interview aired on Sunday.
"What we're doing is lowering interest rates by buying Treasury securities," he said. "And by lowering interest rates, we hope to stimulate the economy to grow faster. The trick is to find the appropriate moment when to begin to unwind this policy. And that's what we're going to do."
Bernanke said it would take four to five years for the country's unemployment rate, which rose to 9.8 percent in November, to come down to what he called more "normal" levels of around five percent to six percent.
When asked if the central bank could possibly go beyond the US$600 billion of bond buys that it announced at its November meeting, Bernanke said: "Oh, it's certainly possible. It depends on the efficacy of the program. It also depends, on inflation. And finally it depends on how the economy is looking," he said.
The Fed will regularly review the policy and could adjust the amount of buying up or down depending on the economy's path, he added.
In a rare televised interview, Bernanke told the CBS program "60 Minutes" the Fed's actions are aimed at supporting what is still a fragile economic recovery, dismissing critics who argue the policy will lead to future inflation.
"This fear of inflation I think is way overstated," Bernanke said in the interview aired on Sunday.
"What we're doing is lowering interest rates by buying Treasury securities," he said. "And by lowering interest rates, we hope to stimulate the economy to grow faster. The trick is to find the appropriate moment when to begin to unwind this policy. And that's what we're going to do."
Bernanke said it would take four to five years for the country's unemployment rate, which rose to 9.8 percent in November, to come down to what he called more "normal" levels of around five percent to six percent.
When asked if the central bank could possibly go beyond the US$600 billion of bond buys that it announced at its November meeting, Bernanke said: "Oh, it's certainly possible. It depends on the efficacy of the program. It also depends, on inflation. And finally it depends on how the economy is looking," he said.
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