Ben Bernanke: Don’t Worry, Be Happy
This week, Federal Reserve Board Chairman Ben Bernanke defended the Fed’s recent purchasing strategies, seeking to assure the public that no drastic changes in policy have occurred.
Bernanke insisted that despite the Fed’s third round of bond purchases known as quantitative easing, or QE3, the basic monetary policy “is the same as it has always been.”
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The speech was meant as a calm explanation in response to public concern surrounding the Fed’s new open-ended plan to buy $40 billion of mortgage bonds each month in an effort to improve labor-market conditions.
Bernanke was sure to emphasize the Fed’s continued pledge to control inflation, stressing that he expects it will remain low for the foreseeable future. “The Federal Reserve’s price stability record is excellent and we are fully committed to maintaining it,” he added.
He went on to deny accusations that the Fed’s recent actions have only made it cheaper for the government to borrow and has enabled Congress to evade tough questions on fiscal policy. “I find this argument unpersuasive,” Bernanke said, stressing that the Fed’s bond purchasing is only temporary.
Driving home his message to Americans that there is nothing to worry about, Bernanke summed up the Fed’s recent strategies and the reasoning behind his speech, saying “we hope that, by clarifying our expectations about future policy, we can provide individuals, families, businesses, and financial markets greater confidence about the Fed’s commitment to promoting a sustainable recovery and that, as a result, they will become more willing to invest, hire and spend.”