Make us your home page
Instagram

Republicans grill Bernanke over inflation threat

Ben Bernanke,  
Federal Reserve chairman

Inflation remains “quite low.”

Ben Bernanke, Federal Reserve chairman

WASHINGTON — Members of Congress sharply questioned Federal Reserve Chairman Ben Bernanke Wednesday over whether the Fed's policies are raising the risk of higher inflation in the months ahead.

House Budget Committee Chairman Paul Ryan, R-Wis., said he is concerned the Fed won't be able to detect inflation until "the cow is out of the barn" and inflation is already spreading dangerously through the economy.

Bernanke acknowledged inflation is surging in emerging economies. But he downplayed the risks to the U.S. economy, even as lawmakers expressed concerns about rising gasoline and food prices.

Inflation in the United States remains "quite low," Bernanke said. He blamed higher prices on strong demand from fast-growing countries such as China — not the Fed's policies to stimulate the economy, including buying $600 billion worth of Treasury debt. His remarks suggest the Fed will stick with the bond-buying plan through June, as scheduled. The program is aimed at invigorating the economy by lowering rates on loans and boosting prices on stocks.

It was Bernanke's first appearance before the House since Republicans took control last month. He faced tough questions from them, despite being a member of the party.

Ryan worries the Fed's stimulus policies, including the debt purchases, could trigger inflation or fuel speculative buying of stocks or other assets: "Many of us fear monetary policy is on a difficult track.''

Rep. Todd Rokita, R-Ind., seemed skeptical of the Fed's ability to fend off inflation before it gets out of hand. In the Fed's history, when did the Fed "get it right?" Rokita asked.

Bernanke said former Fed Chairman Paul Volcker brought down double-digit inflation during the 1980s by pushing up interest rates to levels not seen since the Civil War.

He said he was confident the Fed has the political will to boost interest rates and snuff out inflationary forces before they take hold.

Bernanke did acknowledge that rising gas prices are a threat to the economy. Prices have been around $3 a gallon nationally. If they were to go above $4 a gallon, that would "take a significant amount of disposable income away from people," he said.

Still, he defended the bond-purchase program, saying it is needed to ease high unemployment, and credited all the Fed's stimulus policies with creating or saving 3 million jobs the past several years.

The unemployment rate was 9 percent in January after the fastest two-month decline in 53 years. Bernanke said the drop is encouraging but cautioned it will take four or five years for hiring to return to normal — around 5 or 6 percent. He said the economic recovery won't be assured until companies step up hiring on a consistent basis.

Ryan and Bernanke agreed Congress and the White House must have a plan to reduce the government's $1 trillion-plus deficits. Ryan favors budget cuts. Bernanke didn't endorse specific policies. He said lawmakers should hold off on spending cuts or tax increases until the economy is in better shape.

Bernanke again warned Republicans they shouldn't play political games with the Treasury Department's request to raise the government borrowing authority. Treasury has asked to raise the $14.3 trillion debt ceiling. House Republicans have vowed to make deep spending cuts a precondition.

At the same time Bernanke was testifying, Rep. Ron Paul, R-Texas, held a hearing on whether the Fed's bond-buying program and record-low interest rates can really help create jobs. Paul, an outspoken critic of the central bank, favors abolishing the Fed.

Lawmakers at that hearing also expressed concerns that the Fed's policies will spur inflation.

"If the Fed didn't see this mess coming, will they see the recovery starting in time to turn off the printing presses to stop inflation," asked Rep. Frank Lucas, R-Okla. "I am not sure their vision in the future will be any better than in the past."

Republicans grill Bernanke over inflation threat 02/09/11 [Last modified: Wednesday, February 9, 2011 10:24pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Black entrepreneur says city stiffing him on project after he endorsed Rick Baker

    News

    ST. PETERSBURG — A prominent African-American resident says his endorsement of mayoral candidate Rick Baker has led city officials to freeze him out of a major construction project along the historic "Deuces" stretch of 22nd Street S.

  2. Sen. Nelson urges FEMA to examine high number of denied flood claims

    Banking

    Sen. Bill Nelson urged FEMA on Tuesday to ensure fairness, proper oversight and transparency in processing Hurricane Irma aid following a report by the Palm Beach Post that 90 percent of Irma claims under the National Flood Insurance Program had been denied.

    Sen. Bill Nelson is calling for FEMA to ensure the flood claims process post-Hurricane Irma is fair and ethical following reports that 90 percent of claims under the National Flood Insurance Program were denied. | [Times file photo]
  3. Amazon expands in Tampa with Pop-Up shop in International Plaza

    Retail

    TAMPA — A new retailer known largely for its online presence has popped up at International Plaza and Bay Street.

    Shoppers walk past the new Amazon kiosk Tuesday at the International Plaza in Tampa. The kiosk, which opened last month, offers shoppers an opportunity to touch and play with some of the products that Amazon offers.
[CHRIS URSO   |   Times]

  4. Study: Florida has fourth-most competitive tax code

    Banking

    Florida's tax code is the fourth most competitive in the country, according to a study released Tuesday by nonprofit group Tax Foundation.

    Florida has the fourth-most competitive tax code, a study by the Tax Foundation said. Pictured is  Riley Holmes, III, H&R Block tax specialist, helping a client with their tax return in April. | [SCOTT KEELER, Times]
  5. Trigaux: On new Forbes 400 list of U.S. billionaires, 35 now call Florida their home

    Personal Finance

    The latest Forbes 400 richest people in America was unveiled Tuesday, with 35 billionaires on that list calling Florida home. That's actually down from 40 Florida billionaires listed last year when a full 10 percent listed declared they were Floridians by residence.

    Edward DeBartolo, Jr., shopping center developer and  former San Francisco 49ers Owner, posed with his bronze bust last year during the NFL Hall of Fame Enshrinement Ceremony in Canton, Ohio. DeBartolo remains the wealthiest person in Tampa Bay according to the Forbes 400 list released Tuesday. 
[Photo by Joe Robbins/Getty Images]