Steve Chiotakis: Federal Reserve Chairman Ben Bernanke goes before a Congressional committee today. He’s expected to defend his latest strategy to lower
long-term interest rates. The Fed is hoping to
spark lending, economic growth and, ideally, job creation.
From Washington, Marketplace’s John Dimsdale reports economists are mixed on whether the Fed
is trying to do too much.
John Dimsdale: Unlike all other central banks, the Federal Reserve has a dual mandate: to fight inflation and unemployment.
Bank of America economist Mickey Levy says trying to hit both targets raises unrealistic expectations.
Mickey Levy: Everybody always thinks the Fed can pull a rabbit out of a hat. So the Fed’s always under pressure to do more. And many of the factors that are inhibiting economic growth are beyond the scope of the Fed’s monetary policy.
Things like weak consumer demand and falling home prices. But others say the Fed is right to do all it can to generate jobs.
David Blanchflower used to be a voting member of the Bank of England.
David Blanchflower: The focus right now on unemployment and growth is really central. Down the road, we don’t have a problem of inflation. Inflation is going to fall.
Blanchflower says the European Central Bank made a mistake earlier this year when it raised interest rates to fight inflation. Now, he says, they have to backtrack.
In Washington, I’m John Dimsdale for Marketplace.
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