Skip to comments.Bernanke says Fed stimulus benefits clear, downplays risks
Posted on 02/26/2013 1:25:39 PM PST by LucianOfSamasota
WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke strongly defended the U.S. central bank's monetary stimulus before Congress on Tuesday, easing financial market worries over a possible early retreat from bond buys.
The Fed chairman also urged lawmakers to avoid sharp spending cuts set to go into effect on Friday, which he warned could combine with earlier tax increases to create a "significant headwind" for the modest economic recovery.
Bernanke said Fed policymakers are cognizant of potential risks from their extraordinary support for the economy, including the possibility that it might fuel unwanted inflation or stoke asset bubbles.
But, in testimony on the central bank's semi-annual report on monetary policy, he said the risks did not seem material at the moment, adding the central bank has all the tools it needs to retreat from its monetary support in a timely fashion.
"To this point, 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 told the Senate Banking Committee.
(Excerpt) Read more at news.yahoo.com ...
Ditto that. When the Fed announced opened ended QE last fall, they did it for a reason. Everything was appearing to fall apart and they knew it. 6 months later the power brokers are trying to convince everybody that things are back to normal.