In an appearance Tuesday before Congress, Federal Reserve Chairman Ben Bernanke hailed his inflation record as “the best of any Federal Reserve chairman in the post-war period” and said Congress and the Obama Administration should delay looming sequestration spending cuts.
“The Congress and the administration should consider replacing the sharp, front-loaded spending cuts required by the sequestration, with policies that reduce the federal deficit more gradually in the near term but more substantially in the longer run,” said Bernanke.
Bernanke defended the Fed’s decision to buy $85 billion in bonds every month until unemployment falls to 6.5% despite recent disagreement among some Federal Reserve officials about the wisdom of printing so much money and expanding the Fed’s already enormous balance sheet.
“There is no risk-free approach to this situation,” said Bernanke. “The risk of not doing anything is severe as well. So, we are trying to balance these things as best we can.”
Bernanke argued the Federal Reserve’s aggressive actions are warranted because “high unemployment has substantial costs, including not only the hardship faced by the unemployed and their families, but also the harm done to the vitality and productive potential of our economy as a whole.”