WASHINGTON — Chairman Ben Bernanke offered a sharp defense Monday of the Federal Reserve’s bold policies to stimulate the weak economy, while cautioning Congress to respect its private discussions.
The Fed needs to drive down borrowing rates because the economy isn’t growing fast enough to reduce high unemployment, Bernanke said in a speech to the Economic Club of Indiana. The unemployment rate is 8.1 percent.
Low rates could also help lower the federal budget deficit by reducing the government’s borrowing costs and generating more tax revenue through stronger growth, Bernanke said.
Bernanke cautioned Congress against changing the law so it could review the Fed’s interest-rate policy discussions. Such a step would improperly inject political pressure into those talks and make Fed policymakers less likely to act, Bernanke warns.