Fed Chief Testifies On Capitol Hill
GUY RAZ, Host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Guy Raz.
MELISSA BLOCK, Host:
And I'm Melissa Block. Federal Reserve Chairman Ben Bernanke says the U.S. economic recovery is close to faltering and there's a limit to how much the Fed can do to foster growth. Speaking before the joint economic committee of Congress today, Bernanke said Washington needs to consider other steps to help the economy. NPR's Jim Zarroli reports.
JIM ZARROLI: Bernanke told the committee there have been some positive developments in the economy this year. Manufacturing production is up, so is business investment. But, he said, with the stagnant housing market and the high unemployment rate, growth is sputtering.
BEN BERNANKE: Recent revisions of government economic data show that the recession was even deeper and the recovery even weaker than previously estimated.
ZARROLI: The Fed has responded by buying more long term Treasury debt as a way of forcing interest rates down, which should stimulate growth. And Bernanke said there is more the Fed can do. He said these efforts are significant, but not a game-changer.
BERNANKE: Monetary policy can be a powerful tool, but it is not a panacea for the problems currently facing the U.S. economy.
ZARROLI: Instead, Bernanke said policymakers have to step up to the plate. He listed four objectives that Washington officials need to keep in mind when setting policy. They include promoting long-term growth and addressing the nation's budget problems.
BERNANKE: But a wide range of other policies pertaining to labor markets, housing trade, taxation and regulation, for example, also have important roles to play.
ZARROLI: At one point, Bernanke was asked about a bill now in the Senate that would impose tariffs on China for manipulating its currency. Critics have long complained that Beijing has kept its currency artificially low as a way of stimulating exports. Democratic Senator Robert Casey told Bernanke that the anger over this issue crosses party lines.
ROBERT CASEY: When I talk to people in Pennsylvania and beyond, but especially back home, there is a unanimity about this issue that is pretty rare.
ZARROLI: Bernanke stopped short of endorsing the Senate bill, but he pointed out that the global economy is now operating at two speeds. Industrialized economies like the U.S. and Europe are growing slowly, while emerging markets like China are booming.
BERNANKE: And a more normal recovery, more balanced recovery would have some more demand being shifted away from the emerging markets toward the industrial economies. The Chinese currency policy is blocking that process and so it is, to some extent, hurting the recovery process.
ZARROLI: Bernanke was also asked whether he understood what was fueling the anti-Wall Street demonstrations now taking place in New York and elsewhere. He said people are unhappy about the state of the economy.
BERNANKE: They blame, with some justification, the problems in the financial sector for getting us into this mess and they're dissatisfied with policy response here in Washington.
ZARROLI: And Bernanke said, at some level, he couldn't really blame them. Jim Zarroli, NPR News.
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