Fed chief Ben Bernanke urges steps to improve economy
If folks weren’t listening before, Federal Reserve Chairman Ben S. Bernanke repeated his message from two weeks ago: The nation’s long-term economic prospects remain good if U.S. leaders take the necessary steps to achieve that outcome.
“And I stress ‘if,’” Bernanke said Thursday in remarks to the Economic Club of Minnesota that seemed to anticipate President Obama’s later scheduled speech on job creation.
But the Fed chairman didn’t repeat criticisms he made two weeks ago at the Kansas City Federal Reserve Bank’s annual conference at Jackson Hole, Wyo. There he essentially blamed Washington policymakers for causing upheaval in financial markets and failing to do their part in bolstering the flagging recovery.
Nor did Bernanke offer any new insights about what’s likely to come from the next central bank policy meeting Sept. 20-21. The poor jobs report Sept. 2 has raised the odds that the Fed will take some new measure to further loosen monetary policy in an effort to stimulate lending. Many are betting the Fed will shift its assets and buy more long-term bonds in a bid to further lower rates on mortgages and other longer-term loans.
But mortgage rates are already at all-time lows, according to the latest survey by mortgage giant Freddie Mac. And Bernanke faces dissent from some of his colleagues, who have made it clear that they fear additional monetary stimulus will do more harm than good. Three of the 10 members of the Fed’s policymaking committee voted against the central bank’s statement in August in which it pledged to keep short-term interest rates at near zero for at least two more years.
Asked about that internal division after his speech Thursday, Bernanke joked that when two members agree, one is being redundant. And he sought to dispel concerns that the division in the committee might stand in the way of any needed policy actions.
“It’s natural to have some disagreement,” Bernanke said. He noted that the Fed’s current predicament was in many ways unprecedented, with the economic recovery showing unusual weakness and the Fed already having used its traditional policy tools.
Bernanke said he welcomed the debate and discussion, and insisted that the difference in views was “ultimately constructive.” As chairman, Bernanke from the start has sought to maintain a collegial climate and find a middle ground. It remains to be seen how long that will last.
In a light moment that ended a short question-and-answer session, Bernanke declined to offer a review of actor Paul Giamatti’s portrayal of him in the HBO docudrama “Too Big to Fail,” about the 2008 financial crisis.
“I didn’t see that movie,” Bernanke deadpanned. “I saw the original.”
