December 6, 2010
The Federal Reserve could end up buying more than the $600-billion in U.S. government bonds it has committed to purchase if the economy fails to respond or unemployment stays too high, Fed Chairman Ben Bernanke said.
In a rare televised interview, Mr. Bernanke told the CBS program 60 Minutes the Fed’s actions are aimed at supporting what is still a fragile economic recovery, dismissing critics who argue the policy will lead to future inflation.
“This fear of inflation I think is way overstated,” Mr. Bernanke said in the interview aired on Sunday.
“What we’re doing is lowering interest rates by buying Treasury securities,” he said. “And by lowering interest rates, we hope to stimulate the economy to grow faster. The trick is to find the appropriate moment when to begin to unwind this policy. And that’s what we’re going to do.”
Mr. Bernanke said it would take four to five years for the country’s unemployment rate, which rose to 9.8 per cent in November, to come down to what he called more “normal” levels of around 5 per cent to 6 per cent.
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