Federal Reserve Chairman Ben S. Bernanke met with Senate Banking Committee members on Capitol Hill today, in what two congressional aides said was a briefing on the Fed’s latest round of monetary stimulus.
The meeting started around noon and 10 senators, including Republicans Richard Shelby of Alabama and Bob Corker of Tennessee, were seen entering the committee room. The session was held behind closed doors.
U.S. central bankers voted Nov. 3 to inject another $600 billion of reserves into the banking system through purchases of U.S. Treasury debt in an effort to steer the economy away from deflation and support growth. The second round of purchases followed a previous $1.7 trillion program.
The move prompted a political backlash among Republicans. Senator Corker and Representative Mike Pence of Indiana held a joint press conference yesterday on their proposal to remove the Fed’s full employment mandate and focus the central bank on stable prices alone.
By “restraining the Fed and giving clarity to its mission focused singularly on sound monetary policy, we can avoid future short-term fixes that have long-term inflationary consequences,” Pence said yesterday.
Economists such as Douglas Holtz-Eakin, former Congressional Budget Office director, and John Taylor, a Stanford University professor and former Treasury Undersecretary, said the Fed program should be “discontinued” in an open letter to Bernanke Nov. 15.
The Fed chairman has the benefit of weak inflation data today to explain his position.
The consumer-price index increased 0.2 percent in October, less than forecast by economists, after a 0.1 percent rise the prior month, the Labor Department said today in Washington.
Excluding food and fuel, so-called core costs increased 0.6 percent from October 2009, the smallest gain on record. U.S. housing starts fell 12 percent last month to a 519,000 annual rate, the fewest since a record low reached in April 2009, the Commerce Department said today.
Federal Reserve spokeswoman Michelle Smith declined to comment. Sean Oblack, spokesman for the Senate Banking Committee, wasn’t immediately available for comment.
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