Tags: Fed | Bernanke | Double-Dip | Recession

Fed's Bernanke: 'We Don't See a Double-Dip Recession'

Wednesday, 18 Jul 2012 12:22 PM

Federal Reserve Chairman Ben Bernanke spent a second day testifying before Congress on monetary policy and the U.S. economy.

Bernanke's prepared testimony before the House Financial Services Committee on Wednesday was virtually identical to his presentation to the Senate Banking Committee on Tuesday.

Here are some highlights from the question and answer session during Wednesday's hearing.

On the Budget:

"There ought to be a more gradual approach. I'm not saying we shouldn't consolidate the budget but don't want it to happen all in one day."

On Raising Rates Prematurely:

"Concern has been raised, and I fully understand it and sympathize with it, that low interest rates penalize people who live off the interest earnings of their investments and their savings. My response is that if we are going to have good returns on investment and capital overall, we need a healthy economy. If we raise interest rates prematurely and cause the economy to go into recession, that's not going to be the environment where people can make a good return on their retirement funds or other investments."

On the Gold Standard:

"A gold standard doesn't imply stability in the prices of the goods and services that people buy every day, it implies a stability in the price of gold itself."

On Whether a Recession Looms Ahead:


"At this point we don't see a double dip recession. We see continued moderate growth. But we are very committed to ensuring, or at least doing all we can to ensure, that we continue to make progress on the employment side. And we have stated that we are prepared to take action as needed to try to make sure that we see continued progress on employment."

On 'Fiscal Cliff' Impact on the Recovery:

"The collective impact of the tax increases and spending cuts together come something close to 5 percent of GDP, which if all hit at the same time would be very negative for growth. It is important to combine a more gradual approach with a longer term plan to address the sustainability (issue)."

On Addressing Fiscal Issues:

"I would suggest that in looking at these issues you might want to go beyond the 10-year window, which is usually the basis for fiscal decisions, and at least consider implications of actions for an even longer horizon. It is very important for fiscal stability, for financial stability, for Congress to provide a credible plan for stabilizing our long-term fiscal situation as soon as possible."

On the Dual Mandate:

"Inflation is low, in fact it's below our 2 percent target. So I think the dual mandate has served us well. We do have the ability to address both sides. That said, we will do whatever Congress tells us to do. Low inflation does contribute to healthy employment in the long-term, so they are complementary in that respect."

On Benefits of Regulatory Reforms:

"I wouldn't want to rule out regulatory and tax factors in part of the uncertainty... It's possible that some of these regulations have some impact on the cost of credit but there have been a lot of analysis that suggests that the benefits in terms of reducing the risk of a financial crisis are extremely large and that whatever costs are involved are worthwhile."

On a Bill to Audit the Fed:

"There is...one important exception to what the GAO is allowed to audit under current law, and that's specifically monetary policy deliberations and decisions. So what the Audit the Fed bill would do would be to eliminate the exemption for monetary policy deliberations and decisions from the GAO audit. So in effect what it would do is allow Congress for example to ask the GAO to audit a decision taken by the Fed about interest rates for example. Now that is very concerning because there's a lot of evidence that an independent central bank that makes decisions based strictly on economic considerations and not based on political pressure will deliver lower inflation and better economic results in the longer term."

© 2017 Thomson/Reuters. All rights reserved.

 
1Like our page
2Share
667
2012-22-18
Wednesday, 18 Jul 2012 12:22 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved