WASHINGTON (MNI) – The following is a transcript of comments made
by Federal Reserve Chairman Ben Bernanke during his testimony on
monetary policy to the House Financial Services Committee:
Asked how much more expansion of G8 central banks’ balance sheets
to expect:
“Each of these central banks is dealing in a similar way, and in
this respect the Federal Reserve is not unusual. It’s trying to find
ways to provide more accommodation in a situation where interest rates
are close to zero and so standard cutting the base of the federal funds
rate by 25 basis points doesn’t work.
“All of the central banks in question have similar tools to the
ones we have, including; the ability to pay interest on reserves, the
ability to sell assets and the ability to sterilize their balance
sheets. So that I think we all have adequate tools to withdraw that
accommodation and to shrink those balance sheets at the appropriate
time.
“So I think this is currently where the best available approach is
to provide additional financial accommodation in a world where rates are
close to zero and we can’t obviously go below zero.”
…
“It is infact the case that the amount of currency in circulation
has not been affected by any of these policies. What has happened is
that the amount of electronic reserves held by the banks at the Federal
Reserve has gone up by a great deal but they’re sitting there, they are
not doing much … . So far we’ve not seen any indication that they’ve
proved inflationary.”
** Market News International Washington Bureau: 202-371-2121 **
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