Bernanke Threatens China Over Currency Rates
MELISSA BLOCK, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
ROBERT SIEGEL, host:
And I'm Robert Siegel.
The chairman of the Federal Reserve, Ben Bernanke, today launched a thinly veiled attack on China. Speaking in Germany, Bernanke criticized countries that he said keep their currency rates artificially low. He also defended some of the moves the Fed has taken to stimulate growth in the U.S.
NPR's Jim Zarroli reports.
JIM ZARROLI: The Fed chairmen are usually on a kind of a pedestal. They're slow to answer criticism, and they try hard to stay above politics. But today, Bernanke made some unusually pointed remarks about countries that keep their currency rates artificially low as a way of promoting exports.
Mr. BEN BERNANKE (Chairman, U.S. Federal Reserve): Differences in the degree of currency flexibility impose unequal burdens of adjustment, penalizing countries with relatively flexible exchange rates.
ZARROLI: In other words, countries that manipulate their currency to keep their factories humming and make their exports cheaper build up huge trade surpluses that causes big imbalances and undermines growth around the world.
Bernanke never mentioned China, but it was clearly the prime target of his wrath. The remarks come at a time when China and other countries have criticized the Fed over its policy of quantitative easing. That's a method of pouring money into the economy by buying up long-term Treasury bills.
Critics have complained that the policy is a kind of a backdoor attempt by the United States to weaken its currency. Bernanke said it's other countries that are manipulating their currency, and they need to stop. They should let the markets decide how much their currency is worth.
Sung Won Sohn is a professor of economics and finance at the California State University.
Professor SUNG WON SOHN (Economics and Finance, California State University): Chairman Bernanke is basically saying that, you know, let the market decide. And, again, if you're living in a glasshouse, you shouldn't throw a stone.
ZARROLI: Bernanke went on to defend some of the Fed's recent moves. He said by making money so cheap and available, the Fed is just trying to jolt the U.S. economy back to life and bring down the stubbornly high unemployment rate. And because the U.S. remains such a big part of the world economy, solving its problems will be good for everybody. There was no immediate response from China.
Jim Zarroli, NPR News.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.