Bernanke says Fed’s easy policy benefits world economy
WASHINGTON, Mon Mar 25, 2013 — Federal Reserve Chairman Ben Bernanke on Monday defended the central bank’s aggressive easing of monetary policy, saying while it was aimed at bolstering the economic recovery, it was helping other countries as well.
The Fed’s asset-purchase programs, aimed at keeping long-term borrowing costs down and spurring investment, have been criticized overseas for their adverse impact on emerging market currencies.
But the Fed chief, fresh from a grilling from Congress on the potential domestic risks of his quantitative easing measures, countered the rhetoric about “currency wars,” though he did not use the term specifically.
In prepared remarks to a group of academics in London, Bernanke said the integrated nature of the global economy meant the whole world benefits from a sturdier outlook.
“Because stronger growth in each economy confers beneficial spillovers to trading partners, these policies are not ‘beggar-thy-neighbor’ but rather are positive-sum, ‘enrich-thy-neighbor’ actions,” he said.
In response to a deep financial crisis and recession, and subsequent weak recovery, the Fed not only lowered overnight interest rates to effectively zero but bought more than $2.5 trillion in mortgage and Treasury securities.